Most traders watch price action closely: candlesticks, moving averages, trendlines. But there’s a deeper, less obvious layer of information that often signals shifts in direction before price confirms it: momentum.
📌 Quick overview – what you'll learn:
📈 Price vs Momentum: They're Not the Same!
Momentum doesn't simply track price direction. Instead, it measures the strength behind price movements.
These subtle divergences are powerful because they reveal hidden market shifts before everyone else notices them.
⚠️ How to Spot Momentum Divergence (Simple Steps):
Step-by-step:
- Find clear price swings:
Clearly defined highs/lows on your chart.
- Check momentum indicators (RSI, MACD, CCI, etc.):
Does the indicator agree or disagree with the price action?
- Spot divergence:
Bullish divergence: Price makes lower lows, indicator shows higher lows.
Bearish divergence: Price makes higher highs, indicator shows lower highs.
- Confirmation:
Always wait for price confirmation like a reversal candle or break of a trendline.
🔥 Why Momentum Divergence Works:
📊 Real Example (XAUUSD – April 2025):
Recently in Gold:
🧠 Trading Tips to Remember:
🚩 Common Pitfalls to Avoid:
🚀 Your Action Plan for Next Week:
💬 Question for you:
What’s your go-to momentum indicator when spotting divergence? RSI, MACD, CCI, or something else? Drop a comment below!
Happy trading!
TrendGo Team
📌 Quick overview – what you'll learn:
- What momentum divergence is (clearly explained)
- How it helps predict potential trend shifts
- Practical ways to spot and trade divergences
📈 Price vs Momentum: They're Not the Same!
Momentum doesn't simply track price direction. Instead, it measures the strength behind price movements.
- Rising prices, falling momentum often signals upcoming bearish reversals.
- Falling prices, rising momentum often hints at bullish reversals building beneath the surface.
These subtle divergences are powerful because they reveal hidden market shifts before everyone else notices them.
⚠️ How to Spot Momentum Divergence (Simple Steps):
Step-by-step:
- Find clear price swings:
Clearly defined highs/lows on your chart.
- Check momentum indicators (RSI, MACD, CCI, etc.):
Does the indicator agree or disagree with the price action?
- Spot divergence:
Bullish divergence: Price makes lower lows, indicator shows higher lows.
Bearish divergence: Price makes higher highs, indicator shows lower highs.
- Confirmation:
Always wait for price confirmation like a reversal candle or break of a trendline.
🔥 Why Momentum Divergence Works:
- Divergence highlights hidden accumulation or distribution by smart money.
- Helps you anticipate reversals before price confirms.
- Filters out weak moves and helps you avoid fake breakouts.
📊 Real Example (XAUUSD – April 2025):
Recently in Gold:
- Price was dropping steadily, reaching new lows.
- Meanwhile, RSI showed clear higher lows – classic bullish divergence.
- Result: Price exploded significantly shortly after momentum divergence appeared clearly.
🧠 Trading Tips to Remember:
- Divergence signals are stronger near key support/resistance zones.
- Use momentum divergence with your existing strategy for confirmation, not isolation.
- Always define your risk clearly (set stops above/below recent highs/lows).
🚩 Common Pitfalls to Avoid:
- Trading divergence without confirmation: always wait for the market to show its hand.
- Ignoring the bigger picture: check higher timeframes for stronger signals.
- Overtrading: not every divergence leads to a reversal; quality beats quantity.
🚀 Your Action Plan for Next Week:
- Pick one momentum indicator and identify at least 3 divergences on your favorite assets.
- Monitor how they play out.
- Note down what works best in your trading journal.
💬 Question for you:
What’s your go-to momentum indicator when spotting divergence? RSI, MACD, CCI, or something else? Drop a comment below!
Happy trading!
TrendGo Team
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.