Positive-Negative Divergence

A positive divergence, in technical analysis, occurs when the price of an asset continues to move lower while the underlying technical indicator starts to advance. This is considered a bullish trading signal, especially if one is formed while price action is close to a support zone; it often preceded a breakout.

A negative divergence emerges when price action advances while the underlying technical indicator starts to contract. This creates a bearish trading signal and if it occurs as the asset is closing in on a resistance zone it often precedes a breakdown.

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