How To Spot Bullish Bearish Divergence
Authored On: 23-Jul-15
Last Modified: 23-Jul-15
About. . .
Article gives a detailing as to how one can spot bullish or bearish divergence signal on price chart of security using indicator such as MACD or Momentum
Bearish Divergence simply means the security price is RISING on price chart and technical indicator is falling at the same time. As the directions are opposite, we have Bearish Divergence
Bullish Divergence simply means the security price is FALLING on price chart and at same time, the technical indicator is rising. As the directions are opposite, we have Bullish Divergence.
See below figure shows how easy it is to spot the Bullish or Bearish Divergence
Bullish and bearish divergences on price charts w.r.to technical indicators makes easy reading for possible price rise or correction impending
However, please note following points. . .
Price rise or fall may not be associated with any occurrence of divergence. In fact, divergence as shown above occurs only in few instances
Hence divergence is not a must before one concludes about possible rise or fall for price