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    The Divergence Trap: 20 Martin Pring On Market Momentum

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    TUAN NGUYỄN
    The document discusses market momentum and divergences. It states that the more divergences that precede a break in a trendline price pattern, when combined with other momentum principles, the more significant and intense the break will be. It also notes that divergences usually proceed in an orderly way, getting progressively higher or lower, but then a final unexpected rally sometimes occurs, trapping traders and proving to be a "divergence trap" before the expected price movement occurs.

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    The Divergence Trap: 20 Martin Pring On Market Momentum

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    TUAN NGUYỄN
    91 views1 page
    The document discusses market momentum and divergences. It states that the more divergences that precede a break in a trendline price pattern, when combined with other momentum principles, the more significant and intense the break will be. It also notes that divergences usually proceed in an orderly way, getting progressively higher or lower, but then a final unexpected rally sometimes occurs, trapping traders and proving to be a "divergence trap" before the expected price movement occurs.

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    The document discusses market momentum and divergences. It states that the more divergences that precede a break in a trendline price pattern, when combined with other momentum principles, the more significant and intense the break will be. It also notes that divergences usually proceed in an orderly way, getting progressively higher or lower, but then a final unexpected rally sometimes occurs, trapping traders and proving to be a "divergence trap" before the expected price movement occurs.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    91 views1 page

    The Divergence Trap: 20 Martin Pring On Market Momentum

    Uploaded by

    TUAN NGUYỄN
    The document discusses market momentum and divergences. It states that the more divergences that precede a break in a trendline price pattern, when combined with other momentum principles, the more significant and intense the break will be. It also notes that divergences usually proceed in an orderly way, getting progressively higher or lower, but then a final unexpected rally sometimes occurs, trapping traders and proving to be a "divergence trap" before the expected price movement occurs.

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    of 1

    20 Martin Pring on Market Momentum

    materialize. The same is true for the relationship between price and
    momentum. The completion of any given trendline price pattern signals a
    reversal in trend. However, the more divergences that precede this break, when
    combined with the other principles of momentum significance discussed, the
    more emphasis is placed on the significance and intensity of the break.

    The Divergence Trap

    Most of the time divergences proceed in a fairly orderly way. By this I mean
    that they get progressively lower or higher depending on the direction of the
    trend. Then, just as you expect the price to drop as at point A in figure 1.13, a
    final rally develops out of the blue. Normally, this advance wilt push the
    momentum indicator back above at least one of the two previous peaks,
    causing the wary trader to surrender his bearish sentiment. Typically, this
    latest rally will prove to be a “divergence trap" after which the price will then
    fall in the manner previously expected. This final burst will probably

    Figure 1 . 1 3

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