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Technical Analysis 1 min read

Divergence

Also known as: Bullish Divergence, Bearish Divergence, Hidden Divergence

When price and an oscillator disagree — price makes a new extreme but the indicator doesn't. Early reversal warning.

Types

TypePriceIndicatorImplication
Regular bullishLower lowHigher lowBearish momentum fading, reversal up
Regular bearishHigher highLower highBullish momentum fading, reversal down
Hidden bullishHigher lowLower lowTrend continuation (in uptrend)
Hidden bearishLower highHigher highTrend continuation (in downtrend)

Rules of thumb

  • Higher timeframe divergences are more reliable.
  • Don't trade divergence alone — wait for price confirmation (break of structure, candle pattern).
  • Works best with RSI and MACD.