Divergence

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Divergence is a trading pattern in which the relationship between price action and an oscillator indicator is measured.

If the price begins to move in a negative correlation to an indicator, (ie. higher "highs" in price, but lower "highs" in indicator), it could be viewed as a leading indicator for a potential change in price direction.

Related Articles:

Leading Indicators (Oscillators)

Regular Divergence

Hidden Divergence

9 Rules for Trading Divergences

Divergence Cheat Sheet

"Notice that the stiffest tree is most easily cracked, while the bamboo or willow survives by bending with the wind."
Bruce Lee
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