Negative Divergence
Updated on March 12, 2023
Divergence is a technical analysis concept that compares the movement of a financial instrument’s price to a technical indicator, such as a moving average or an oscillator. Divergence can be either positive or negative.
Negative divergence is a technical analysis concept that occurs when a financial instrument’s price and a technical indicator, such as a moving average or an oscillator, move in opposite directions failing to confirm any trends. In a negative divergence, the price of the instrument is increasing while the technical indicator is decreasing, or vice versa. This divergence can be a potential signal that the current trend is losing momentum and may be about to reverse. However, it’s important to note that negative divergence is not always a reliable indicator of a trend reversal and should be used in conjunction with other analysis tools for confirmation.
What is positive divergence?
Positive divergence occurs when the price of the instrument is increasing while the technical indicator is also increasing, or vice versa. This can be a potential signal of a trend continuation.
