Divergencies

MACD Divergence

When price pushes but MACD momentum doesn’t — a useful ‘weakening’ clue.
How to use this lesson
Read it once, then open a chart and try to spot the same idea in 60 seconds. Repetition beats complexity.
What it is

Divergence is when price makes a new high/low, but MACD does not.

It highlights momentum disagreement with price.

Like RSI divergence, it’s a warning light — not a guarantee.

Lesson diagram 1
How to identify it

Bearish: price higher high, MACD lower high.

Bullish: price lower low, MACD higher low.

Use clear swing highs/lows for better signals.

What it means

Momentum is weakening even if price is still pushing.

Often leads to a pullback or a range before a bigger decision.

Best used with trend + a key level (support/resistance).

Lesson diagram 2
Common mistakes (avoid these)
  • Shorting the first bearish divergence in a strong uptrend.
  • Calling tiny moves divergence (noise).
  • Ignoring that divergence can lead to a pullback, not a full reversal.
Why it’s useful

Helps spot momentum shifts earlier than price alone.

Helps manage risk (tighten stops / take partial profits).

Pairs well with levels to improve timing and confirmation.

Lesson diagram 3
Next step
Open the Dashboard, pick a stock, and try to explain what you see in one sentence. If you can explain it simply, you understand it.
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