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Technical Analysis Explained, Fifth Edition: The Successful Investor's Guide to Spotting Investment Trends and Turning Points, 5th Edition by Martin J. Pring

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28 INDICATORS AND RELATIONSHIPS THAT MEASURE CONFIDENCE

A negative divergence between an A/D line and a market average is a broad measure of a subtle loss of confidence by market participants. It is also possible, though, to gain an insight into confidence levels by observing relationships that compare what we might call speculative to defensive areas, as these, too, often serve in a more direct way as an indication of growing confidence or lack thereof. When these relationships are reflecting a trend of growing optimism, it is a positive sign and is an indication of higher prices. When they are deteriorating, an omen of weakness and lower prices is signaled.

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