The Concept of Vortex Indicator Divergence with Examples
In technical analysis, divergence is a term that is used to represent when the price of any cryptocurrency on the chart is moving in the opposite direction of the technical indicator on the chart. Vortex indicator divergence in this case is basically when the price of the selected cryptocurrency pair in moving in one direction and the positive vortex line or the vortex indicator is moving in another direction.
The vortex indicator divergence can either be bullish divergence or bearish divergence. Simply put, when the price is moving down and the positive vortex (+VI) line is moving up, then it is a bullish divergence, and when the price is moving up and the positive vortex (+VI) line is moving down, then it is a bearish divergence. To demonstrate the vortex indicator divergence, I will be using the ETH/USDT chart.
Bullish divergence
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ETH/USDT Chart
Bearish divergence
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ETH/USDT Chart
Is the Vortex Indicator Reliable?
The vortex indicator is regarded as a reliable technical indicator that is known for its accurate signals and also buy and sell signals as well. When it comes to detecting trend reversals and confirm the current trend, the vortex indicator tends to produce accurate signals by utilizing its two oscillating lines crossing. Like a lot of other indicators, the downside of the vortex indicator is that is can also create a lot of false signals especially when using it on short-periods. However, when using it on longer-periods, the signals tends to be few but considered very accurate. Nonetheless, no single indicator is perfect, and even though the vortex indicator is seen as a very reliable indicator, it is important to make use of the vortex indicator with other great indicators for signal confirmation.