Divergence Cheat Sheet in Forex Trading: Know about Types of Divergence in Detail!

In this blog we are going to tell you about Divergence Cheat Sheet in Forex Trading, so read this blog carefully to get the complete information.

Trading in the stock market becomes easy if as a trader you understand different indicators and technical analysis. These indicators and technical analyses can help you in attaining desired results. One such popular technical analysis in trading is Divergence. In this guide, we will tell you more about this technical analysis and Divergence Cheat Sheet in Forex Trading in detail.

What is Divergence in Forex Trading?

Divergence refers to the price movement procedure when the price of an asset moves in the opposite direction of a technical indicator which is usually an oscillator. Divergence alerts that the current price trend may get in a price-changing direction.

Divergence implies that the ongoing trend can either continue or there can be a reversal in the trend as well. This interpretation becomes more useful when a trader knows what type of divergence is used in which situation.

About Divergence Cheat Sheet in Forex Trading

In the Divergence Cheat Sheet, you will get a video, a free mt4 divergence indicator, and information on how to use divergence situations when the asset price moves in one direction and the oscillator moves in another direction.

Mainly, there are two types of divergence which are Regular Divergence and Hidden Divergence. The divergence indicates different predictions so understanding them eventually can act as a divergence cheat sheet for the trader who is using it.

What does it mean by Divergence Bias?

Before knowing more about cheat sheets, it is important to understand the term ‘Bias’ in divergence. Any prediction that may occur due to the above-mentioned divergences will have a bearish or bullish bias. So Bias refers to the strong signal that the divergence is generating. In addition to this, it becomes more understandable when you will learn about the two types of divergences.

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Divergence Cheat Sheet in Forex Trading

The following is the cheat sheet to help a trader understand the hidden divergence and the regular divergence in a better way:

1. Cheat Sheet for Regular Divergence

Regular divergence gives a sign of an expected reversal in the current direction. The standard divergence bias predicts how the possible reversal may take place. There are two types of regular divergence bias which are mentioned below so that you can know what they indicate:

• Regular Bullish Divergence: In this case, the market displays the security price at a lower low, but the oscillator shows a higher low. This condition implies that the bearish trend is losing its power, and a possible bullish trend is taking a strong position. Hence, the chance of a trend reversal from bearish to bullish.
• Regular Bearish Divergence: The other case is when the market reflects the price at a higher high, but the oscillator shows a lower high. This condition is bearish bias as it implies that the bullish trend is no longer dominant, and the bearish trend may take over. Thus, there is a possibility of a trend reversal from bullish to bearish.

2. Cheat Sheet for Hidden Divergence

Unlike the Regular Divergence, the Hidden Divergence infers that the current trend may proceed. The bias of hidden divergence implies in which direction the trend is likely to continue. The following are the two types of hidden divergence bias mentioned below along with what they indicate:

• Hidden Bearish Divergence: When the price displays a lower high, but the oscillator shows a higher high, in such a condition the trader can expect the situation to be bear biased. The bearish or downward trend is predicted to continue and in such cases, the traders take selling positions.
• Hidden Bullish Divergence: When the market price of the security is at a higher low, but the oscillator shows a lower low such a trend is bull bias. In this condition, the trader can expect a bullish or upward trend and this is an ideal time for traders to enter or re-enter the market.

Table to Understand Divergence Cheat Sheet

Here is the table to understand and remember Divergence Cheat Sheet in a better way:

Why should traders use RSI oscillators for divergence?

Divergence is always displayed by an oscillator which is used in technical analysis. RSI or relative strength index is one of the most famous oscillators which is used to identify divergence in trading. There are other oscillators present as well which are used to identify divergence but our si is among the best because of its following features:

• Divergence in RSI is easy to identify because of a single line with 14-period historical data.
• Another reason which makes this RSI oscillator more accurate for divergence is its ability to find out overbought and oversold prices.
• RSI has 30 and 70 levels which make it easy to identify divergence in oversold and overbought prices.

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How to Confirm Divergence Before a Forex Trade

Divergence is a heads-up, not a green light. Stack proof. Control risk.

1. Set the context

• Check the higher timeframe (H4/D1). Don’t fight the main trend.
• Mark strong support/resistance or supply/demand zones.
• Use regular divergence at swing extremes. Use hidden divergence with the trend.

2. Make sure it’s real divergence

• Use RSI (14), MACD, or Stochastic.
• Compare the same swing highs/lows on price and on the indicator.
• Align the timing. No cherry-picking.

3. Wait for price-action confirmation

• Look for a clean signal at the level:
  • Bullish: pin bar, bullish engulfing, morning star.
  • Bearish: shooting star, bearish engulfing, evening star.
• Or a break of a small counter-trendline.
• Or a structure shift (higher high after bullish divergence, lower low after bearish).

4. Add a momentum filter

• RSI crosses 50 in your direction.
• MACD signal-line cross with a fading histogram.
• Stochastic turns out of overbought/oversold with a clear slope.

5. Stack confluence

• Divergence + key level (S/R, 61.8/78.6 fib, prior swing).
• Reaction at the 20/50 EMA (reject, reclaim).
• Lighter volume on the last push, if you track volume.

6. Check another timeframe

• Spot the setup on M15/H1 (or your execution chart).
• Make sure the next higher timeframe isn’t against you.
• If H4 trend is up, prefer bullish setups. Skip weak shorts.

7. Choose your entry style

• Conservative: wait for a close beyond the micro trendline or the signal candle.
• Moderate: place a limit at the retest of the broken level or the engulfing mid-body.
• Aggressive: enter on the signal close, with smaller size.

8. Manage risk first

• Stop goes past the invalidation point:
  • Bullish: below the divergence low.
  • Bearish: above the divergence high.
• First target at 1R. Move to breakeven at 1R or after a structure break.
• Scale out at key levels. Trail under higher lows/over lower highs.

9. Quick checklist

• Clear regular or hidden divergence?
• At a strong level (S/R, fib, supply/demand)?
• Price-action trigger present?
• Momentum filter aligned (RSI 50, MACD cross)?
• Higher timeframe okay with the idea?
• Defined stop and at least 1:1.5 to first target?

10. Example: bullish regular divergence

• Context: Price dips into H1 demand.
• Signal: Price makes a lower low; RSI makes a higher low.
• Trigger: Bullish engulfing + break of a minor downtrend line.
• Momentum: RSI pushes above 50.
• Entry: Retest of the broken line or the engulfing mid-body.
• Stop: Below the divergence low.
• Targets: 1R at first supply; 2R at the prior swing high.

Common mistakes

• Taking every divergence in a strong trend.
• Forcing swing points that don’t match.
• No trigger or structure shift.
• Chasing entries far from a logical stop.
• Ignoring news that can blow through levels.

The final words

Understanding Divergences is not very confusing as by reading and with little practice, traders can use divergence to make predictions in the market. But, it is important to know that using a technical oscillator is essential for making these right predictions. Without an indicator or oscillator, the trader can not confirm the movement of the trend. In addition to this, it becomes even more important when you are using a momentum oscillator like RSI (Relative Strength Index), CCI (Commodity Channel Index), or Williams %R.  We will recommend you read the two types of divergences and their biases to predict the security or commodity market. And then only the cheat sheet can help the trader to confirm their entry or exit from the market and it will make decisions easy as per the predictions.

We hope you found this guide helpful and understood the term divergence along with the types of divergence and divergence Cheat sheet in Forex trading.

Conclusion

We Hope this blog is sufficient enough to provide the information about Divergence Cheat Sheet in Forex Trading. Thanks for reading this blog.