Forex glossary
Hidden Divergence
Bullish hidden divergence pairs a higher price low with a lower oscillator low; bearish hidden divergence pairs a lower price high with a higher oscillator high. It is interpreted as a possible continuation setup. The mismatch alone establishes neither a pullback's end nor the next price direction.
Illustrative example
How does it work in practice?
Assume price lows at 100 and 103 with corresponding RSI readings of 40 and 32 under identical settings. The higher price low and lower RSI low form a hypothetical bullish hidden divergence.
A case to work through
Lower price high, higher RSI
Hypothetical corresponding price highs are 120 and 116, with RSI readings of 55 and 63.
- Price makes a lower high while the oscillator makes a higher high.
- This fits bearish hidden divergence under the stated terminology.
What follows? Record the classification separately from any entry rule.
Example boundary: The mismatch does not establish the correction's end; settings and pivot matching must remain consistent.
A useful distinction
Hidden Divergence / Regular Divergence
Bearish hidden divergence has a lower price high and higher oscillator high; regular bearish divergence reverses those relationships.
Check your understanding
Classify bearish hidden divergence.
Show the answer and explanation
Bearish hidden divergence
Price lowers its high while the oscillator raises its high.
Oscillators without mixed scales
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Related terms
Sources and documentation
- TradingView – RSI
RSI gain/loss calculations, conventional thresholds and divergence interpretation.
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