Divergence occurs when prices move in one direction (up or down) and an indicator or indicators based on those prices moves in the opposite direction. This signal implies an impending correction or change in the direction of market. "Bullish" or "positive" divergence occurs when price lows are not confirmed by indicator lows. "Bearish" or "negative" divergence is when indicator peaks start declining while prices continue to rise.
MACD is used to determine overbought or oversold conditions in the market. MACD is formed by spreading 26 period and 12 period exponential moving averages. A Signal line is also part of the MACD; this is typically a 9 period exponential moving average of the MACD line. Divergence between price action and the MACD when plotted as a Histogram, warn of an impending correction or reversal in a market.
A situation in which two or more averages or indexes fail to show confirming trends. see also Moving Average Convergence/Divergence.
Divergence - difference between tendencies in the market, represented by the price schedule and the schedule of the technical indicator.
An action by one indicator moving, not in conjunction or agreement with another indicator, but rather counter to or short of it. Such nonconfirmations often signal reversals.
Occurs when an oscillator line and prices move in opposite directions providing early warning of a possible trend reversal. A Bullish Divergence is identified when price declines make new lows while the underlying momentum indicator (eg RSI or Stochastics) does not make new lows. A Bearish Divergence is identified when price rallies make new highs while the underlying momentum indicator (eg RSI or Stochastics) does not make new highs. The implication of momentum and price making divergences is important. It implies that the movement in price in one direction is slowing and highlights the risk for reversal. Divergence commonly occurs after a trend and therefore highlights potential for the trend to complete or reverse. It is important to ensure that other analysis confirms the possibility of a reversal.
When two or more price series and/or indicators fail to show confirming trends. Negative divergences occur at market peaks, while positive divergences develop at market bottoms. The significance of a divergence is a direct function o its size; i.e., over time, the question is whether there is a series of divergences between the indicators and the number of indicators that are diverging.
The process by which two lithospheric plates separated by rifting move farther apart, with soft mantle rock rising between them and forming new oceanic lithosphere. See also convergence.
Consider an area on the earth's surface. On the sides which face the wind, air will flow into the area, while on the other sides air will flow out. If, however, the wind is not uniform, more air may flow out than flows in, and the amount of air in the area will tend to decrease: this process is called divergence. In this case there is a deficit of air, which is balanced by a descent of the upper air layers above the area. This descent is called "subsidence". The subsiding air warms up, its relative humidity falls, and fine weather is the usual accompaniment of subsidence, though fog, stratus or stratocumulus clouds may occur under certain conditions. The contrary case is called convergence.
a very powerful situation in technical analysis
A discrepancy between tendencies in the market, represented by the price schedule and the schedule of the technical indicator.
The ability for the eyes to turn outwards together to enable them to both look further away. The opposite of convergence. (see above) It is essential for efficient learning and general visual performance to have good divergence and convergence skills.
A net outflow of air from a particular area. Divergent winds at low levels are not favorable for cloud development.
Spreading out of air molecules away from each other and a certain location. More air is leaving than entering the location. The opposite of convergence, divergence at upper levels of the atmosphere enhances upward motion, and hence the potential for thunderstorm.
When related technical indicators fail to confirm a price move. For instance, if prices reach new highs and stochastics do not, this is negative divergence and is bearish. If prices establish new lows and stochastics do not make new lows, this is called positive divergence and is bullish.
tendency for glider to increase steepness of dive. Indicates dangerous lack of pitch stability.
An atmospheric conditions that exists when the winds cause a horizontal net outflow of air from a specific region.
the net outflow of air from a region, typically caused by horizontal wind motion; the opposite of convergence
A condition that exists when the distribution of winds in a given area is such that there is a net horizontal outflow of air from the area.
It is the opposite of confirmation. It occurs when two or more indicators move in opposite directions. Traders and investors often look for divergences by comparing a stock's direction to the direction of its indicators. There are two kinds of divergences: positive and negative. A positive divergence occurs when the indicator moves higher while the stock is declining. A negative divergence occurs when the indicator moves lower while the stock is rising. For example, a bearish divergence is when increasing prices are accompanied by falling OBV. Another example of bearish divergence is when price makes a high, pullback then makes a higher high; but RSI makes a high, pullback then makes a lower high.
When two or more averages or indices fail to show confirming trends.
The disparity between indicators when a price action has made a move. One indicator confirms that the move was correct, the other shows the opposite. For example, if prices hit high and the relative strength index does not, a divergence has occurred.
Opposite of Convergence. Air molecules become too sparse in a divergent area and need to be replenished by having other air molecules rise up from below or sink from above. Upper level divergence causes air from below to rise into the divergent area, causing lift. Low level divergence causes air from above to sink into the divergent area, stabilizing the atmosphere.
A situation where two indicators are not confirming each other.
Prices moving in an opposite direction to another indicator. E.g. share price rising but volume decreasing may indicate a potential turning point is on the way.
The moving apart of air currents to cause a depletion of the air. (The reverse of Convergence.) Divergence at one level is often almost balanced by convergence at another. When such balance is not achieved, the surface pressure rises or falls.
See on: Wikipedia Investopedia A situation in which the price of an asset and an indicator, index or other related asset move in opposite directions. In technical analysis traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the MACD, are moving in opposite directions.
When no confirming trends can be established from the comparison of two or more averages.
Wind movement that results in a horizontal net outflow of air from a particular region. Divergence at lower levels is associated with a downward movement of air from aloft. Contrast with convergence.
The opposite of convergence: a condition where the eyes' lines of sight 'toe-out' from each other.
Occurs when two indicators are not confirming each other. The indicators could be price, volume and technical indicators like Stochastic, RSI, OBV, Momentum. Divergence often indicates a trend reversal.
When two or more indices show differing or unrelated trends
In vector calculus, the divergence is an operator that measures a vector field's tendency to originate from or converge upon a given point. For instance, for a vector field that denotes the velocity of air expanding as it is heated, the divergence of the velocity field would have a positive value because the air is expanding. Conversely, if the air is cooling and contracting, the divergence would be negative.
