Divergence

Price rises but indicator (RSI/MACD) falls (or vice versa) - warning of reversal.

Bullish divergence: price makes a lower low but RSI/MACD makes a higher low = downtrend losing steam. Bearish: price new ATH but indicator lower high = momentum fading. Best on higher timeframes (D1, W1).

In plain words

Price rises but the indicator (e.g. RSI) starts dropping - a sign the rally is losing power.

Example

BTC March 2024: ATH 73k with RSI 89, April second peak 72k with RSI 68 -> bearish divergence -> -25% correction in May.

Also known as: bullish divergence, bearish divergence

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