What is divergence in trading?

Divergence in trading signifies a lack of alignment between the actual price movement of an asset and the technical indicators upon which traders rely. These indicators are designed to provide estimates of an asset's price.

What does divergence mean?

Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction. There is positive and negative divergence.

What is divergence in technical analysis?

Divergence in technical analysis may signal a major positive or negative price move. A positive divergence occurs when the price of an asset makes a new low while an indicator, such as money flow, starts to climb. Conversely, a negative divergence is when the price makes a new high but the indicator being analyzed makes a lower high.