I love trading divergence. The first trading system that worked for me used stochastic mini-divergence for setups, and I still seek out divergence patterns today. I especially love trading MACD divergence.
Bearish MACD divergence occurs during an uptrend when price is making higher highs while the MACD line or histogram is making lower highs.
The idea is that the lower highs on the MACD line or histogram could be an early indicator that momentum is leaving the uptrend, which increases the odds of a reversal. When combined with a strong bearish reversal signal, like the bearish engulfing candlestick pattern, the odds of a reversal are even better.
In divergence setups like this, divergence is actually the key signal. The bearish engulfing candlestick pattern,
or another bearish candlestick pattern, is only used to laser target your entry.
if you want to learn how to trade the market using my price action trading strategies,
i highly recommend purchase my ebook (the candlestick trading bible). if you are interested,check it out in my bio, or send me a private message.