The definition of Divergencies
By this time having a look a the system of our programs at the Binary Options Academy it is possible to notice that we are providing information about all kinds of analyses starting from easy technical ones up to complex ones, as well as involving the fundamental types.
The idea of divergencies has been also covered in these programs, however this project is dedicated to other kinds of divergencies not widely known to everybody – namely hidden ones and positive&negative divergences.
Similar to the rest types of divergenies, it should possess the oscillator (which is the index), as well as its objective is to analyze the dynamics of the value in comparison to the dynamics by the oscillator. After that it is necessary to explain such analysis.
The concept of divergence is taking place while the value and the oscillator are differing to the extent that the user has to pay attention to distinctive dynamics of the value and oscillator and make an attempt to understand the actual dynamics – that of the value or of the oscillator?
In most cases it can be noticed when the exchange is not achieving the new high, but the oscillator is, or visa versa, the exchange reached the new high or low, however the oscillator is not demonstrating it.
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The Definition of Hidden Divergences
This is a traditional divergence, but still it is not the one and only to be operated with. After watching carefully the 2 video added to this program it is possible to understand the definition of the hidden divergencies and the ways to operate with them on the basis of this idea.
These kinds of diveregencies are regarded as overwise due to the obvious reason, coming from their name “hidden”, which indicates that it is hard to trace its whereabouts.
The traditional divergence, as it was said before, lays on the distinctions between the value and the oscillator. As the oscillator is making a divergence with an increasing tendency in the result it is called the bullish one, and the one known as bearish divergence possesses the falling tendency, demonstrating the declining situation. In the 1st case the call is recommended, however in the 2nd situation the put must be applied.
Nearly all divergences are depicted from the bottom or from the top due to the reason that they lay on the value vs. oscillator distinctions. But on the other hand, there exist such divergences which can appear in the center of the oscillator limits.
For instance, a method to define it is to depict the line in the center of the oscillator and explain the data there, but not at the repurchased and the oversold rates.
Relative Strength Index can be a good example. The traditional explanation of RSI is – any price under the level of thirty is regarded as oversold and that is why it is necessary to purchase a call due to the fact that the exchange is expected to change the direction to the opposite one. In this situation it is necessary to apply the traditional binary options divergence.