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How to Identify Potential Bottoms

Views 121KMar 26, 2024
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When using technical analysis, there are many methods or patterns that can help us analyze if a trend may reverse, such as "Divergence".

Divergence usually refers to a situation where the stock price is moving in the opposite direction of a technical indicator (e.g. MACD/KDJ/RSI).

If a stock price continues to fall, but the technical indicator shows an upward trend, this is called "positive divergence", indicating that the stock may have bottomed and could climb.

Conversely, negative divergence is usually seen as a warning that the stock price may have peaked and may go down.

How to identify stocks showing "positive divergence" or "negative divergence" quickly? Let me show you.

Assuming that I wish to know which stocks in the US stock market are currently showing "positive divergence", I can do the following:

Step 1, open the moomoo app, tap "Market".

Then tap "US".

Find "Screener" on this page.

Step 2, choose indicators based on your strategy;

You can set the range, such as “Regions” and "Exchanges".

If you want to invest in an index constituent stock, you can choose one or more indexes.

Tap "Technical" on the left, and select the type according to your needs.

For example, select "Daily".

Then, select one or more of your favorite technical indicators, and set the condition of "Positive Divergence" or "Negative Divergence".

For example, set "Positive Divergence" in the MACD, KDJ, and RSI indicators.

Step 3, tap "Results".

Within a few minutes, I can know the answer.

It should be noted that the appearance of a divergence pattern does not necessarily mean that the stock price will trend up or down within any period of time. Also, not all stocks would show divergence before the trend reversal.

But we can combine several data or technical indicators with the goal of helping to improve the odds of investment success and minimize the risk of loss by simply adding other conditions to the "Stock Screener".

Tap Below for a quick experience of the Papertrade tool!

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy.

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