What is a hidden divergence?

Typically a hidden divergence can also be categorized by a bullish or bearish hidden divergence. For example, a bullish hidden divergence happens during a correction of an uptrend when the value of an asset makes a higher low. However, the oscillator is still showing a lower low.

What is divergence in trading?

Divergence in trading refers to a discrepancy between an asset’s current price actions and the momentum indicator patterns. They often suggest a significant change in the course of price development. Classic indicators are indicators of a change in the trend for the concerned assets. They can be bullish or bearish.

What is bearish divergence?

Bearish divergence is the opposite. The momentum indicator signals the market strength weakening while the asset continues to move up in price. In most cases, this could mean that the momentum is slowing. Divergences are not always as straightforward as the classical or regular types, which brings us to hidden divergences.

What is a classic divergence?

Classic divergence occurs when the asset continues to make higher highs while the momentum indicator pattern continues to develop lower highs, or when the price makes lower lows while the momentum indicator pattern develops higher lows. The latter is known as a bullish divergence while the former is known as a bearish divergence.