Divergence

What Does It Mean?
What Does Divergence Mean?
When the price of an asset and an indicator, index or other related asset move in opposite directions. In technical analysis, traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the money flow index (MFI), are moving in opposite directions.

Divergence
Investopedia Says
Investopedia explains Divergence
In technical analysis, divergence is considered either positive or negative, both of which are signals of major shifts in the direction of the price. Positive divergence occurs when the price of a security makes a new low while the indicator starts to climb upward. Negative divergence happens when the price of the security makes a new high, but the indicator fails to do the same and instead closes lower than the previous high.
Related Links
Get a new investing term in your inbox each day!
- join our Term of the Day!
Sponsored Links
MARKETPLACE
TRADING CENTER
CURRENT HIGH YIELD SAVINGS RATES
Type
Overnight avgs
Rate data provided by
Bankrate.com
add investopedia foot
www.investopedia.com