S&P500 & US30 Active DivergenceDivergence does not always have to be observed through the lens of a lagging indicator. Closes do provide powerful signals as to when a move is likely to reverse direction. They also allow us to enter with a smaller risk.
Lets first compare the previous swing lows marked out on both charts (dotted orange horizontal line) on the 20th Dec 2024. Zoom in on the white arrows! What do you see with the closes?
Now focus in on the S/R zone in purple. Notice that the block width is created from the highest high and the highest low of the same swing. These are very important inflection points from which to compare closes when observing divergence between both instruments.
Now observe the yellow arrows!! What do you see with the closes when comparing the S/R zone in purple?
Now look at the yellow UPWARD diagonal median line of both purple pitchforks . have they both touched the same median line? Yes or No? perhaps another line confirming divergence?
As an additional confirmation the market has touched the upper line of both light blue DOWNWARD pitchforks on both instruments with the current candle
Lets see if we get the reversal.
Cheers
