Quick Look - Bullish Divergence vs Bearish Divergence

Here is a graphical representation of the simple concept of bullish and bearish divergences.

Rules are pretty clear

Bearish Divergence
  • Happens only in uptrend
  • Observed on pivot Highs
  • Price makes higher high whereas oscillator makes lower high, indicating weakness and possible reversal

Bullish Divergence
  • Happens only in downtrend
  • Observed on pivot Lows
  • Price makes lower low whereas oscillator makes higher low, indicating weakness and possible reversal

Watch out for hidden divergences on the opposite pivots and breakouts in the direction of trend.


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