What is the difference between regular divergence and reverse divergence (also called hidden divergence)? Answer below. And cute cheatsheet from babypips.
Regular (less extreme)
Regular divergence is when the momentum indicator makes a less extreme turn (more towards the center line of the indicator range, is 50 on a scale of 0 to 100 in the case of my preferred momentum indicator, the slow stochastic with default settings of 14-3-3).
Reverse (more extreme)
Reverse divergence is when the momentum indicator makes a more extreme turn (ie further away from the centre line).
And off course you don’t just look at the turn of the momentum indicator in isolation — you compare the highs/lows of the price chart to that of the momentum indicator. But you already knew that.