Momentum becoming exhausted .... Divergence

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Derek  5 Oct 2017


After a strong run in the US, momentum is becoming exhausted. No surprise for TradeFX users as we are moving more and more into overbought territory.

I show the S&P500 and notice the colour of the HeatMaps. The trend line though, shown on chart, remains positive.

Similar to the Index, JPMorgan had a strong run, but with divergence in an overbought area it corrected -1.02%.

JSE Technical:
Divergence is also noticeable in the Rand/$ price. I show Anheuser-Bush that is also reflecting this divergence in an overbought area.

After Shoprite moved into oversold area, it broke the downward trend line and is showing signs of positive movements now. I would like it to break the resistance line on which it closed.

Just a reminder again what divergence is. If the price makes a new high, but the technical indicators do not, then you have a sell divergence. The reverse for the bottom. There are plenty of articles on the web on divergence .... just Google it and you will find a better description than my short version.

Enjoy your day.
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