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What is Regular Divergence in Forex Trading?

Regular divergence is a key technical analysis signal used to anticipate potential trend reversals in the forex market. It occurs when the movement of price and momentum indicators begin to disagree — often signaling that the current trend is weakening.

There are two main types of regular divergence:

✅ Regular Bullish Divergence
✅ Regular Bearish Divergence

✅ Regular Bullish Divergence

A regular bullish divergence appears when:

Price forms lower lows (LL)
But the oscillator forms higher lows (HL)

This setup typically occurs at the end of a downtrend and suggests a possible bullish reversal.

The reason? Momentum (represented by the oscillator) is no longer supporting the bearish price move. If the oscillator fails to confirm a new low while the price does, it signals a weakening downtrend — and a likely price rebound.

📉 Signal: Watch for the price to stop declining and start rising.

✅ Regular Bearish Divergence

A regular bearish divergence occurs when:

Price forms higher highs (HH)
But the oscillator forms lower highs (LH)

This typically happens during an uptrend and indicates that the bullish move may be losing strength.

If the price makes a new high, but the oscillator doesn’t confirm with a higher high, it may signal a potential trend reversal to the downside.

📈 Signal: Expect the price to drop after forming the second peak.

🔍 How to Use Regular Divergence

Regular divergence is best used when trying to identify market tops and bottoms. It acts as a warning that momentum is shifting, and the current trend may not be sustained much longer.

By paying attention to divergence between price action and indicators like:

RSI (Relative Strength Index)
MACD (Moving Average Convergence Divergence)
Stochastic Oscillator

…you can improve your chances of entering or exiting trades at optimal points.

What’s Next?

Now that you’ve learned about regular divergence, it’s time to uncover its lesser-known cousin: hidden divergence.

Don’t worry — it’s not buried deep like some market mystery. It’s simply hidden within the current trend and signals trend continuation rather than reversal.

➡️ Let’s dive into hidden divergence next.

Stay Educated with Daily Forex Pakistan.

Yasher Rizwan