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Patterns and divergence

Forex academy · Technical toolkit

Technical toolkit

The idea

A chart pattern organizes repeated price behaviour into a testable description. Divergence occurs when price and a chosen indicator do not make matching extremes. Neither provides a complete entry, invalidation or sizing rule. Define those separately and record failed examples rather than studying only attractive winners.

A worked example

A higher price high with a lower momentum high is divergence, but the trend can continue before any reversal develops.

Try it yourself

Write objective rules for one pattern: lookback, trigger, invalidation, time limit and no-trade conditions.

A mistake to avoid

Drawing only patterns that succeeded and ignoring the ones that failed.

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