Divergences are formed when there is a mismatch between the price action and the momentum, measured by the oscillator relative to price. Quite often you will notice that divergences tend to occur near support and resistance levels.
Therefore, divergence trading can be used not only to time the entry into a trade within a trend, but it can also help you to understand support and resistance levels. While divergences are broadly classified into 4 types, the underlying theme among all the four types of divergence is that it shows price exhaustion when the oscillator fails to confirm the new highs or the lows.