What is top divergence
When the stock price trend on the K-line chart is higher than the previous peak, the stock price has been rising, while the trend of the graph composed of red columns on the MACD indicator graph is lower than the previous peak, that is, when the high point of the stock price is lower than the previous one, The high point is high, but the high point of the MACD indicator is lower than the previous high point of the indicator. This is called top divergence. top
The divergence phenomenon is generally a signal that the stock price is about to reverse trend from a high level, indicating that the stock price is about to fall in the short term, which is a signal to sell the stock.
After the stock price has risen for a period, MACD's top divergence means that the stock price is at the same level or higher than the previous high stock price (from a macro perspective, a rough look, and the stock price trend). The DIFF in the MACD indicator does not rise in sync with the price but is low or flat (a closer look) , the ratio of the numerical value is operable), in the cdl indicator, DIFF turns from red to green. However, the effectiveness of various technical indicators is not the same.
The stock price depends on the trend, not necessarily on the highest, lowest or closing price. It depends on the general appearance. The DIFF below should be compared with the previous peak, so it must be accurate.
The best way to use it is not to look at the upper price, but only to look at the highest point of MACD's DIFF. As long as this new peak does not have the previous high, it is considered a divergence. Generally, there will be a decline of at least 15%.
