Divergence
When two related indicators or currencies move in opposite directions, often signaling a potential trading opportunity or trend reversal.
What is Divergence?
In currency strength analysis, divergence occurs when two currencies move in opposite directions - one strengthening while another weakens.
Currency Strength Divergence
The best trading opportunities come from pairing:
- Strongest currency (highest positive score)
- Weakest currency (lowest negative score)
Example
If our Currency Strength Meter shows:
- EUR: +55 (strong)
- JPY: -48 (weak)
- Divergence: 103 points
This strong divergence suggests BUY EUR/JPY (buy the strong, sell the weak).
Divergence Levels
| Divergence | Signal Strength | Action |
|---|---|---|
| 0-30 points | Weak | Avoid trading |
| 30-50 points | Moderate | Consider trading |
| 50+ points | Strong | High probability setup |
Why Divergence Works
When currencies diverge strongly:
- Genuine market conviction exists
- The trend has momentum
- Risk/reward is favorable
Check the strength meter to find divergence opportunities in real-time.