The purpose of classic divergence is to recognize a technical imbalance between price and oscillator, with the assumption that this imbalance will signal an impending directional change in price. In a nutshell, divergence can be seen by comparing price action and the movement of an indicator. It doesn’t really matter what indicator you use. You can use RSI, MACD, Stochastic, CCI, etc. but this indicator will help you focus on the most likely divergence areas as it has been built from refining divergence signals of more basic indicators, and after some practice it’s not too difficult to spot.

When traded properly, you can be consistently profitable with divergences. The best thing about divergences is that you’re usually buying near the bottom or selling near the top. This makes the risk on your trades very small relative to your potential reward.

This indicator also shows you trend information and some other trading details that can help with your trades. You can modify the MACD parameters and the trendline options.