Description
⋅ 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.