Scribd
Upload
141 views1 page

The Divergence Trap: 20 Martin Pring On Market Momentum

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.

Uploaded by

TUAN NGUYỄN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
141 views1 page

The Divergence Trap: 20 Martin Pring On Market Momentum

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.

Uploaded by

TUAN NGUYỄN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 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

You might also like