Divergence as an indicator

When an indicator such as the RSI or CCI makes a low and then some time later makes a higher low while price makes a lower low then we have divergence. It can be seen in the chart below where price and the indicator are not in congruence. This incongruence usually mean that price is at an extreme and not in accord with the indicator and so will turn back up if the indicator continues to rise. Also, note that the last candle, the one on the far right, has appearance like a hammer. Sometimes refered to as a hammer bottom. Click chart to enlarge.

The 20 day chart of 4 hour time periods show the momentum is still to the downside. This is a 5th wave pattern in Elliott wave analysis. At the end of the 5th wave two outcomes are possible: An ABC correction, or a new wave count. We will have to wait and see.