IMUGENE CHART. TA only, page-29224

Steve, we are looking at swing highs and lows for the indicator and the chart. Several indicators can be used, I peruse macd without the fast & slow lines. No particular reason. Simple explanation :

Look at consecuconsecutive swing lows on both windows - indicator & chart. Draw a line between the bottom of the two points of them in each window. If the angles are different (one points up, the other down) this is bullish. When it's on the bottom it indicates an approaching change of swing direction.

Do the same for the swing highs - this shows bearish.

It doesn't matter which is which, one is "hidden divergence" and the other is classic. But they both have the same outcome. Only thing to remember is on the swing highs = bearish, swing lows = bullish. Like just about all indicators, the larger the time frame the more reliable the signal.

Its essentially looking at how much strength it takes to get the price to the same level. More strength generally indicates more move. When this doesn't happen, in the case of divergence, it indicates more strength was required to move not as far, hence the other team is about to have a crack. Or less strength moved it further, showing some exhaustion (it didn't keep going), so the other team is about to have a crack.

Im sure there are hundreds of articles available to explain the ins and outs if you want more info.