When looking at a chart with an oscillator attached to it, one doesn't have to wait a long time before a divergence* between the price and the indicator reaveals itself. Also when looking at history data one can see that after a divergence, there is sometimes a change in the trend/direction of price, which makes many traders (i guess) believe that divergences is a powerfull tool.
Is this just a random consequence of how the indicators are made? Or are there any predictive values in divergences?
I was hoping for someone to shed some light on this topic.
Why don't you try testing this with Zorro? Answering this type of question is exactly what Zorro is designed to do. If you can attempt to write a script for testing this and post it, other users will help you out.
When, for example, price is rising, but volume is rather low, a reversal is very frequently imminent. Same, of course, for falling price with suddenly low volume. It's a Market Maker trick.
Please share your script when you feel ready to do so.
