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Divergence

What is Divergence?

Divergence is when the indicator doesn't follow the same pattern as the price any more. In other words: when this pattern between the indicator and the price is diverted. When they don't show the same peaks and troughs any more.

Bullish Divergence

If the price is in a down trend and creates a lower low (trough) over the previous low, but the indicator does not, then this is a Bullish Divergence.

Bearish Divergence

If the price is in an up trend and creates a higher high (peak) over the previous high, but the indicator does not, then this is a Bearish Divergence.

Example of Divergence

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