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Divergence

When price makes a new high or low but an indicator such as RSI does not, hinting that momentum is weakening.

Bearish divergence between price and RSIA price line whose second peak is higher than its first, drawn above an RSI panel whose second peak is lower than its first, with the two peaks joined by sloping dashed lines.PRICEhigher highRSI (14)70overbought30oversoldlower high
Divergence between price and RSI. RSI measures how one-sided recent price moves have been on a 0–100 scale. Here price sets a higher peak while RSI sets a lower one, so the second push carried less momentum than the first.

Bearish divergence: higher price high, lower indicator high. Bullish divergence: lower price low, higher indicator low. It is most often read on rsi or macd.

Divergence can persist for a long time in a strong trend and is a warning, not a trigger. Traders typically wait for a structural break, such as a lower low, before acting on it.

Example: a stock prints lows at $30 then $28, while RSI prints 25 then 34. The second low was made with less downside momentum, which is bullish divergence.

Related: rsi, macd, trend, pullback

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