Forex glossary
Divergence
Divergence is a mismatch between corresponding price and indicator extremes. Regular and hidden versions use different high or low relationships and interpretations. Detection requires consistent settings, defined pivots and their confirmation timing; the geometry does not prove a subsequent price move.
Illustrative example
How does it work in practice?
Assume confirmed price peaks at 100 and 103 USD with corresponding RSI readings of 72 and 65. The higher price peak and lower RSI peak form a hypothetical regular bearish divergence.
A case to work through
Points from different bars
Hypothetically, price peaks occur on bars 10 and 20, but someone compares RSI from bars 8 and 18.
- Read RSI at the corresponding price peaks or apply explicit pivot-matching rules first.
- Comparing arbitrary extremes can create an apparent disagreement.
What follows? Record the point pairs before classifying divergence.
Example boundary: Matching methods can produce different labels; disagreement does not guarantee a reversal.
A useful distinction
Divergence / Regular Divergence
Divergence is the broader category; regular divergence is a specific new price extreme without oscillator confirmation.
Check your understanding
Reject comparisons between mismatched points.
Show the answer and explanation
Match the price and oscillator points
The comparison needs an explicit timing or pivot basis.
Oscillators without mixed scales
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Related terms
Sources and documentation
- TradingView – RSI
RSI gain/loss calculations, conventional thresholds and divergence interpretation.
Document read: - TradingView – MACD
Main MACD, signal smoothing and the MACD-minus-signal histogram.
Document read:
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