What is divergence in stock market?

What is Divergence? Divergence is when the asset price moves in the direction opposite to what a technical indicator indicates. When a stock is diverging, it signals weaker price trends and the beginning of a reversal.

What is divergence & convergence?

In the world of economics, finance, and trading, divergence and convergence are terms used to describe the directional relationship of two trends, prices, or indicators. But as the general definitions imply, these two terms refer to how these relationships move.

Why are technical traders more concerned with divergence than convergence?

Technical traders are much more concerned with divergence than convergence, largely because convergence is assumed to occur in a normal market. Many technical indicators commonly use divergence as tools, primarily oscillators. They map out bands (both high and low ones) that occur between two extreme values.

What is technical divergence?

In technical analysis, most indicators can give three different types of trading signals: crossing over a major signal line, crossing over a centerline and indicator divergence. Divergence occurs when an indicator and the price of an asset are heading in opposite directions.