Traders use divergences as a leading indicator that may signal a potential change in price direction. If divergence hints at the following upward movement, it is called bullish divergence. To find bullish divergence, traders should look only at the lows/bottoms of both price actions and indicators.
What is bearish divergence?
A price chart showing bearish divergence is characterized by the formation of progressively higher highs by the price candles in the presence of progressively lower peaks formed by the oscillator’s signal line. This setup can occur in the form of a bearish divergence RSI signal or a bearish divergence MACD signal.
What is a bullish divergence RSI signal?
The bullish divergence MACD signal uses the point of the cross between the MACD lines in the indicator window as the reference signal from the oscillator. Furthermore, the bullish divergence RSI signal uses a special setup on the RSI signal line known as the failure swing.
What is the difference between bullish divergence RSI and MacD?
The sole difference is that a bullish divergence RSI signal uses the price troughs formed by the single signal line to detect the divergence. The bullish divergence MACD signal uses the point of the cross between the MACD lines in the indicator window as the reference signal from the oscillator.
