Divergence, explained
A divergence is a disagreement between price and a momentum indicator at two consecutive swing points. It describes how a move has been unfolding. It is not a forecast, and many divergences are followed by more of the same trend.
Educational purposes only. Not financial advice. Past performance does not guarantee future results.
The four kinds
Regular bullish
Price makes a lower low, the indicator makes a higher low.
The second push down came with less momentum than the first.
Regular bearish
Price makes a higher high, the indicator makes a lower high.
The second push up came with less momentum than the first.
Hidden bullish
Price makes a higher low, the indicator makes a lower low.
The pullback dipped harder in momentum terms while price held above the previous low.
Hidden bearish
Price makes a lower high, the indicator makes a higher high.
The bounce was stronger in momentum terms while price stayed below the previous high.
Bullish divergences are measured at swing lows, bearish ones at swing highs.
How ClosedCandle detects them
- Only confirmed swing points. A swing low or high counts once a closed candle has moved 1.5 × ATR (14) away from it, the same swing points the pattern scanner uses.
- Two consecutive swing points of the same kind (two lows, or two highs), between 5 and 120 candles apart.
- Indicator values at those two candles: RSI (14), which must differ by at least 2 points, and the MACD (12, 26, 9) histogram, which must be below zero at both lows (or above zero at both highs).
- Recorded when the candle that confirmed the second swing point closes, with that time, and never changed or deleted afterwards. Later candles cannot add, move or remove a divergence.
Real examples (4h, RSI)
The most recent recorded example of each kind. The dashed line joins the two swing points; the dot marks the candle that confirmed it.
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Where to find them
- Each coin page lists recent divergences and draws them on the chart (for example BTC indicators).
- The Scanner can show only patterns whose coin and timeframe had a divergence in the last 20 candles.
- Members can get a message when a new divergence is recorded, from the alerts page.