Divergence alone is not a setup. Divergence can continue far longer than most people are prepared to hold a drawdown. It's just a reason we might look for more defined setups to trade.
The key here is on Friday we made a new high in price but not , tantalisingly reachin 19,999.6 on the cash index and frustrating those calling for 20k again.
On this timeframe, you'd look for a daily candle to close below friday's (last candle in chart) low (or more cautiously, Thursday's low )
This should set up a correction of the Trump rally. However w must remind ourselves that the long term bull trend is still a strong one, and - in my opinion - we've no good *technical* reason at this time to believe any move down is anything but a retracement.
Also be aware that we've been ranging (red horizontal channel). Breaking that lower bound of the range is further confirmation that a bigger retracement is likely. It's likely any sharp move down will come back to retest the range as resistance, providing more opportunities for entry.
I leave you to pick target levels for yourself based on entry if you see confirmation of these setups, but personally, I think a return to at least 19,000 dow would not be surprising, should price action confirm the divergence.
We're still looking for a good break lower, but aggressive traders may already be in shorts. Should be a good runner, if we can get lower this week.
Just trade carefully here, using that channel bottom 19800 as a guide. If it's going to act as support today, you may find it sets of a run to the top of the channel again, and maybe even the mythical 20k (now everyone has finally shut up about it :D )
Anyway, let's hope it works out for both of us!