Price Divergence
When you hear price divergence, a situation where an asset’s price moves away from a confirming indicator, often signaling a potential reversal. Also called price divergence, it acts like a warning light on a car dashboard – you feel something’s off before the market confirms it.
Core concepts behind price divergence
Understanding technical analysis, the practice of evaluating price charts, patterns, and indicators to forecast future moves is the first step. Within technical analysis, the MACD (Moving Average Convergence/Divergence), a momentum oscillator that shows the relationship between two moving averages often highlights price divergence when the MACD line and price chart drift apart. Similarly, the RSI (Relative Strength Index), a 0‑100 oscillator measuring overbought or oversold conditions can diverge from price, flagging hidden strength or weakness. Both tools require a trader to compare price action with the indicator; a widening gap usually signals that the current trend may be losing steam.
Why does this matter for a bull market, a prolonged period where prices generally rise? In a bull run, price often outpaces momentum indicators, creating bullish divergence that confirms the uptrend. Conversely, a sudden bearish divergence—price climbing while MACD or RSI fall—can hint at an imminent correction, even when the broader market still feels bullish. Catching that shift early lets you tighten stops or take profits before a larger pullback.
Every trader, whether you’re just starting or already running a multi‑asset portfolio, can use divergence as a simple filter. Spot a bullish divergence on a low‑timeframe chart, wait for confirmation on a higher timeframe, and you have a higher‑probability entry. See a bearish divergence while the market is in a late‑stage rally? That’s often a cue to scale back exposure. Below you’ll find reviews of exchanges, token deep‑dives, risk‑management guides, and more—each tied to how price divergence can shape decision‑making across the crypto ecosystem.
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