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The Trading Trap


Infonut

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Is this about the divergence of cumulative delta with price? Thanks!

 

Yes, if price is forming a high but CD is making higher highs then you can assume that over committed buyers are trapped at the high and they have to get out. It is Known as hidden divergence. Same rule is applied to bottom as well, in that case price has to form a low but CD will continue to make lower lows indicating trapped over committed sellers at the bottom.

Thanks,

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