NHNL Divergence Indicator
The NHNL (New Highs-New Lows) Divergence Indicator is a tool used by traders to identify potential market reversals or continuations by comparing the number of new highs and new lows in a given period. The basic trading rules involve looking for divergences between price movement and the NHNL indicator: if prices are making new highs while the NHNL shows fewer new highs, it could indicate weakening momentum and a potential bearish reversal; conversely, if prices are making new lows but the NHNL shows fewer new lows, it may signal a bullish reversal. Traders typically wait for confirmation on price action before entering positions, combining this indicator with other tools for a more comprehensive analysis.