Definition
When price and an indicator like RSI (Relative Strength Index) or MACD (Moving Average Convergence Divergence) move in opposite directions, for example price makes a new high but the indicator doesn't.
The story
NQ (E-mini Nasdaq-100 futures) pushes to a new high, but RSI peaks lower than it did at the last high. That's called bearish divergence: price is higher, but the push behind it looks weaker. Bullish divergence is the reverse. Some traders read it as a warning that momentum is fading, but divergence can last a long time without price turning.
Why you'll see it
It's one of the main ways traders use momentum indicators.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms