Divergence Analysis and Confirmation
Confirmation provides signals of trend reversal or continuation, with the strongest and most reliable forms located in close proximity to resistance or support. This is especially the case when the price gaps above resistance or below support, and it assumes that signals appear in the proper location in the trend. A few important rules apply:
• A bullish reversal is valid only when it appears in a downtrend.
• A bearish reversal is valid only when it appears in an uptrend.
• A bullish confirmation is valid only when it appears in an uptrend.
• A bearish confirmation is valid only when it appears in a downtrend.
All of these observed rules are naturally associated with proximity. Price action at resistance ...
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