Sibbet Demand Index Divergence
The Sibbet Demand Index Divergence dentifies potential trend reversals by comparing price action to the Sibbet Demand Index (SDI), which measures market demand. Divergence occurs when price moves in one direction (making new highs or lows) but the SDI shows opposite behavior (e.g., not confirming new highs or lows). This misalignment signals weakening momentum, often indicating a potential shift in market direction.
- Bullish Divergence: Price makes lower lows, but SDI holds steady or rises — suggesting a possible trend reversal to the upside.
- Bearish Divergence: Price makes higher highs, but SDI shows a decline — suggesting a potential reversal to the downside.
Traders use this divergence to spot opportunities for entry or exit based on potential market shifts.