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Free Trading School · Level 11: Sentiment, Intermarket and Divergence

Divergence: when momentum disagrees with price

5 min readLesson 5 of 5Beginner

Divergence happens when price and a momentum oscillator such as RSI or MACD move in different directions. It is one of the most useful warnings that a move is losing strength.

Bearish divergence: price makes a higher high while RSI makes a lower high.

TypePriceOscillatorSuggests
Regular bearishHigher highLower highUptrend weakening
Regular bullishLower lowHigher lowDowntrend weakening
Hidden bullishHigher lowLower lowUptrend likely to continue
Hidden bearishLower highHigher highDowntrend likely to continue

Divergence is a warning, not a trigger. Trends can show divergence several times before turning. Wait for price to confirm, for example with a break of a trendline or a lower low.

Key takeaway

Divergence tells you to tighten up and watch closely, not to jump in front of the trend.

Quick answers

What do beginners need to know about divergence: when momentum disagrees with price?

Divergence happens when price and a momentum oscillator such as RSI or MACD move in different directions. It is one of the most useful warnings that a move is losing strength.

What is the key takeaway from the lesson on divergence: when momentum disagrees with price?

Divergence tells you to tighten up and watch closely, not to jump in front of the trend.

Price makes a higher high but RSI makes a lower high. This is…

Regular bearish divergence. Momentum is weakening while price pushes higher.

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