Divergence Flashing Reversal Warning in DIA? Divergence in technical analysis is simply a separation between price action and various indicators or oscillators. Divergence however, should never be used as a stand alone tool. FlashPoint Trading Academy uses divergence to assist in our swing trade entries and exits.
FlashPoint entered a long in DIA back on January 17th at $141.23. Having noticed a divergence between DIA's price and RSI, Stoch and MACD, we've set a stop-on-close order right below the 10 day EMA to ensure we lock in current gains. Simultaneously, we will also execute a sell stop order to enter a new short position as well with our initial target set at $256.61. Further weakness in the underpinning of major markets could see an even larger move down to $247.58.
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