Divergence is one of the most valuable concepts in technical analysis because it provides early warning that the underlying momentum of a move is inconsistent with price itself. Bullish divergence occurs when price makes a lower low while an indicator like RSI or MACD makes a higher low — suggesting that sellers are losing power even as price is still falling. Bearish divergence is the opposite: price makes a higher high while the indicator makes a lower high, indicating that buyers are progressively less committed. Divergence is most reliable when it appears at key structural levels such as major support or resistance, rather than in the middle of an open range. It should be treated as a warning signal rather than a trade trigger — the divergence tells you the current move is weakening, but confirmation from price structure (a swing failure, a close back inside a level) is required before acting.
