Predictive value in divergences

Hi!

When looking at a chart with an oscillator attached to it, one doesn't have to wait a long time before a divergence* between the price and the indicator reaveals itself. Also when looking at history data one can see that after a divergence, there is sometimes a change in the trend/direction of price, which makes many traders (i guess) believe that divergences is a powerfull tool.

Is this just a random consequence of how the indicators are made? Or are there any predictive values in divergences?

I was hoping for someone to shed some light on this topic.

Thanks!

*http://www.investopedia.com/terms/d/divergence.asp

Why don't you try testing this with Zorro? Answering this type of question is exactly what Zorro is designed to do. If you can attempt to write a script for testing this and post it, other users will help you out.

IMO, definitely a worthwhile area of study

When, for example, price is rising, but volume is rather low, a reversal is very frequently imminent. Same, of course, for falling price with suddenly low volume. It's a Market Maker trick.

Please share your script when you feel ready to do so.

Regards,
Merlin