1. What Is Divergence?
Divergence occurs when price and an indicator move in opposite directions. It is a strong signal of a trend reversal.
2. Regular Divergence
📊 Trend-Reversal Signals
Bullish divergence:
Price: lower lows ↓ | RSI: higher lows ↑ → Indicates an upward reversal.
Bearish divergence:
Price: higher highs ↑ | RSI: lower highs ↓ → Indicates a downward reversal.
3. Hidden Divergence
A signal confirming trend continuation.
- Hidden bullish: Price forms a higher low while RSI forms a lower low → upward continuation.
- Hidden bearish: Price forms a lower high while RSI forms a higher high → downward continuation.
4. Which Indicators Can Confirm It?
- RSI — The most common choice.
- MACD — Check the histogram.
- OBV — Volume-based divergence.
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