M3 Divergence Tools

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Divergence Tools

Divergence means no matter the indicator if the price is doing one thing, for example, going up, and your indicator is going down, that’s a divergence. Meaning there’s no consensus between price and oscillator data. That means that there is a high probability price is going to move in the opposite direction. For example, if the price is heading down; however, the oscillator is going up, this is a bullish divergence and vice versa. Divergences tend to play out quite a lot within markets; hence, it’s a potent tool. Often they provide robust price moves predictions.




RSI: Relative Strength Index. This mode detects the strength of the move within the market. Spectro M3 will detect any divergence between price and RSI. If it finds divergence, it will plot it on the chart.

MFI: Money Flow Index. MFI is an oscillator which uses volume in its formula. Money Flow can also detect divergence, and if Spectro M3 detects such divergence, it will again plot within the chart.

DPO: Detrended Price Oscillator. DPO attempts to eliminate long term trends in prices by using a displaced moving average, so it does not react to the most current price action. Again, Spectro M3 will detect any divergence within this tool and plot it within the chart.

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