Regular and hidden divergence, and why confirmation is required.
| Concept | Explanation | |---|---| | Bullish divergence | Price forms a lower low while the indicator forms a higher low. | | Bearish divergence | Price forms a higher high while the indicator forms a lower high. | | Regular divergence | Usually interpreted as possible trend weakening or reversal. | | Hidden divergence | Often interpreted as possible trend continuation; definitions require care. | | Confirmation | Price structure, breakout, volume, or another independent signal supports the divergence. |
Divergence can persist for a long time and may appear differently depending on which highs and lows are selected. Treat it as evidence of changing momentum, not a timing signal by itself.