1. Convergence is described as when price action is generally following the same path as what we are seeing in our technical indicator. Basically, price and indicator are doing the same thing.
For example:
2. Divergence is described as when price action is not following the same path as what we are seeing on our technical indicator. Price and indicator are doing the opposite thing.
For example:
We can conclude that:
Convergence = possible trend continuation
It's mean that you sholud trade by following trend. If the market has a down trend than you spoted a convergen where the market making higher high, both on price and indi. I think it's not a good trade, but if you still want to trade it, be sure about your risk reward ratio.
Divergence = possible trend reversal
This is a counter trend trading. You fight again the trend. You go short when the market still showing an up trend. Your target must be on the nearest support resistance level.
Once again we talk about market direction, where the price go.
Does the price have an up trend or a down trend?
You can use my MARS method or other indicator to determine the trend.
Enjoy your trade
* all charts is represent weekly price movement
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