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Divergence

When price and an indicator move in opposite directions.

Technical AnalysisIntermediate

Definition

In bullish divergence, price makes a lower low while an indicator such as RSI makes a higher low, suggesting selling momentum is fading. In bearish divergence, price makes a higher high while the indicator makes a lower high. It is a warning about momentum, not a timing tool.

Watch out for

Divergences can last a long time before price turns, and many do not lead to a reversal.

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