GreenfieldAnalysis

What is a bearish divergence?

Education
NYSE:NIO   NIO INC
What is the Moving Average Convergence Divergence ( MACD ) Indicator?
The Moving Average Convergence Divergence ( MACD ) is a trend-following momentum indicator . The indicator tells us the relationship between two moving averages of the security price. To determine MACD subtract the 26-period exponential moving average from the 12-period exponential moving average . There is a nine-day exponential moving average of the MACD that is used as the "signal line." Whenever MACD crosses the signal line that is an indication to sell or buy.

The histogram indicates strength. Dark green means the bulls are stronger. Light green means the bulls are weak. Dark red means the bears are strong. Light red means the bears are weak. The centerline for MACD is 0.

What is a bearish divergence?
A bearish divergence occurs when the price rise to a new high but the indicator new peak is lower than the previous high peak.

Forecastability of the bearish divergence
The bearish divergence indicator predicts a bearish future for the stock. However, do not assume a bearish divergence will be bearish all the time. There is an exception: in a strong bull market, the bearish divergence will transform itself and the uptrend may continue.

Thank you for reading!

Greenfield












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Disclosure: Article written by Greenfield. A market idea by Greenfield Analysis LLC for educational material only.



Comment: Disclosure: Chart reading is subjective information. Subjective information means that the information comes from personal opinions, assumptions, interpretations, and beliefs. Therefore, one should do their own research and come to their own decision. I am not a financial advisor.
Comment: I added MACD Valley A and MACD Valley B. MACD Valley B is higher than MACD Valley A. Everything else is the same.

Comments

Also, consider the higher lows forming on the MACD. I anticipate a continuation of the bullish trend and a clean break through your MACD trend line. Happy Trading!
+2 Reply
@chiefwils0n, I agreed! Great Point! Cheer!
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You are correct with your description but wrong in your example. Look again at where you placed your trend lines, the chart does not show bearish divergence. Be careful with how you post, as there are a lot of new investors who might be swayed by wrong information.
+1 Reply
@jpinvestore, Thank you for the comment. I will modify my disclosure. Disclosure: Chart reading is subjective information. Subjective information means that the information comes from personal opinions, assumptions, interpretations, and beliefs. Therefore, one should do their own research and come to their own decision. I am not a financial advisor. Have a nice day!
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nice lesson. ev's r hot. this could be a buy opportunity
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Go further and use Fib Circles to see that this is going to 10$
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javaman1376 yupyupyup
@yupyupyup, If you think fib circles make sense in this case, buy an OTM put. One look at positive momentum + ev sector + pre released data points nio in a direction already. They're market leaders. They'll get bought out before they reach $10 lol
+1 Reply
@javaman1376, Thank you for mentioning Fib Circles. Have fun studying fib circles! Cheer!
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@yupyupyup, Thank you for mentioning Fib Circles. Have fun studying fib circles! Cheer!
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I saw this same signal and took profits, will swing trade basically and get back in hopefully once it drops a tad more. Good charting!
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