Divergences: When Price Lies

What is Divergence?

Divergence is when price and an indicator (usually RSI or MACD) move in opposite directions. It signals weakening momentum and potential reversal.

Two Types of Divergences

Bullish Divergence: Price makes lower low, RSI makes higher low = Reversal UP

Bearish Divergence: Price makes higher high, RSI makes lower high = Reversal DOWN