Divergence (Technical)
When price and a momentum indicator disagree — often read as an early hint the trend is weakening.
Divergence occurs when price and a momentum indicator like RSI or MACD move in opposite directions. Bearish divergence: price makes a higher high but the indicator makes a lower high, suggesting fading momentum behind the rally. Bullish divergence is the mirror, hinting a decline is losing steam.
Divergence is one of the more respected uses of oscillators, because it can flag exhaustion before price turns. But it’s far from infallible — divergences can persist for a long time in strong trends (“divergence is not a timing tool”), and they’re clearer in hindsight than in real time. Like all technical signals, it’s a probabilistic hint best combined with other evidence, not a standalone trade trigger.