Education

Quick Look - Bullish Divergence vs Bearish Divergence

Here is a graphical representation of the simple concept of bullish and bearish divergences.

Rules are pretty clear

Bearish Divergence

Happens only in uptrend
Observed on pivot Highs
Price makes higher high whereas oscillator makes lower high, indicating weakness and possible reversal

Bullish Divergence

Happens only in downtrend
Observed on pivot Lows
Price makes lower low whereas oscillator makes higher low, indicating weakness and possible reversal

Watch out for hidden divergences on the opposite pivots and breakouts in the direction of trend.

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