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The E.G. Divergence is an indicator implemented for the NinjaTrader 8 platforms. Divergence in technical analysis may signal a major positive or negative price move; divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data.
Divergence is when the price and indicator are telling the trader different things. Confirmation is when the indicator and price, or multiple indicators, are telling the trader the same thing. Ideally, traders want confirmation to enter trades while in trades. If the price is moving up, they want their indicators to signal that the price move is likely to continue; traders use divergence to assess the underlying momentum in the price of an asset and to assess the likelihood of a price reversal.
For example, investors can plot oscillators, like the Relative Strength Index (RSI), on a price chart. If the stock is rising and making new highs, ideally the RSI is reaching new highs as well. If the stock is making new highs, but the RSI starts making lower highs, this warns the price uptrend may be weakening.
Integration with the E.G. Trigger Point (optional)
To increase the signals’ probability, the E.G. Divergence indicator can be automatically integrated with the E.G. Trigger Point levels to confirm position entries when a divergence is detected; it can be configured to only generate sound effects when the market is near a Trigger Point level.
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