Price Uptrend Evidenced by the 200 EMA Nov. 29
If price is in an uptrend on all levels of charts, as evidenced by the 200 EMA, and an uptrend continuation pattern is evolving, such a phenomenon can presage further upward momentum - including driving price higher Into an overbought condition - even above the central pivot point,which is a sell area. Also, you will notice that, when price action is evolving in an uptrend continuation pattern, and leg two is yet to unfold, once that leg consummates, it is entirely possible that negative divergence on MACD to price will occur.
Now, given the fact that price is still in an uptrend, as reflected in the attitude of the 200 EMA, the magnitude of the correction foretold by the divergence can be minimal. MACD divergence, or any divergence, for that matter, only suggests that price will correct, but not by how much. You then have to use price projection methods to make such a determination - i.e., as to how far price will travel.
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–Peter
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