Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction.
If the stock is rising and making new highs, ideally the RSI is reaching new highs as well. If the stock is making new highs, but the RSI starts making lower highs, this warns the price uptrend may be weakening. This is negative divergence. Positive divergence is the opposite situation. Imagine the price of a stock is making new lows while the RSI makes higher lows with each swing in the stock price. Investors may conclude that the lower lows in the stock price are losing their downward momentum and a trend reversal may soon follow.
Divergence is one of the common uses of many technical indicators, primarily the oscillators.
Your indicator is awesome. I check kind of 50 indicators and your is on the top of it. Just quick question. What is bottom green DOT & top red DOT define as well you draw some Green dotted line, some red dotted line from HL to LL & LH to HH what is the meaning of it. Would you please explain so I have better understanding
Probably my favorite indicator, made a few settings input changes since I like using Connors RSI i.e., "RSI" RSI Length 2, source CRSI, Zigzag length 4, "Wedge" 3, unchecked dates. Style changes, Upper Band 90, Lower Band 10. Thanks for the work.