30 Haziran 2022
How divergence plays an important role in trend reversals?

First thing first, trend never stays in one direction forever. Sometimes it moves up and sometimes it moves down but how do we know that in anytime of near future we are expecting a reversal.

In the pic below, we can clearly see that on [AUDUSD ](https://www.tradingview.com/symbols/AUDUSD/)trend is massively down from arrow area and everyone is looking to sell this pair.

https://i.redd.it/utos1pbapz521.png

And every time when this down trend pullbacks we get a better price to sell (as if we are getting a higher price to sell) but think for a minute, when everyone is looking to sell and waiting for a pullback to happen so they can join the massive downtrend who will be the buyer? And how long we can sell a currency? Obviously, it can’t remain in one direction (sell in this case) forever.

Now in the next picture notice one thing when the price starts to fall down we see a LL and LH and we start selling this [AUDUSD ](https://www.tradingview.com/symbols/AUDUSD/)pair then another LL and LH and another sell then another LL and LH and another sell. Now we all now that we are making a LL and LH so when market is making LL and LH who will be interested in buying? NO ONE…
After first 4 big pushes down, notice one thing all trend pushes seem to be weaker than they were initially and pullbacks are coming in deep. When momentum starts to fade out that will be the first sign that market may REVERSE in near future.

https://i.redd.it/yhekq69fpz521.png

A healthy trend always have momentum and health in it. If momentum starts to fade out and trend starts to loose its health what happens that those trend pushes starts to become smaller and weaker and pullback starts to come in deep. This is when [Macd](https://www.tradingview.com/ideas/macd/) comes in handy. In the next pic, you will see after being in a downtrend for so long when you get the first sign of trend is now loosing its power (momentum and health) how you can use [macd](https://www.tradingview.com/ideas/macd/) to confirm.

https://i.redd.it/b9af2lrkpz521.png

This pic shows that when we were making LL and LH, on [Macd](https://www.tradingview.com/ideas/macd/) we were also getting the same thing, but at the very right bottom of the pic we can see that we had LL and LH but on [macd](https://www.tradingview.com/ideas/macd/) , story was totally different, we had HH and HL so this is the 2nd sign of possible trend reversal and this is time when [Macd](https://www.tradingview.com/ideas/macd/) comes in handy on finding the reversal with divergence.

So, in order to confirm we just have to go 1 time frame lower which is 4h in this case to see either we have a HH and HL on 1 smaller tf or not.

https://i.redd.it/3sk649ylpz521.png

We can see in above pic after ranging for quite long on 4h we finally had a HH and HL and then the buyers started to kick in.

After divergence, buyers came in hot.

https://i.redd.it/oizd2u2qpz521.png

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