What is bullish hidden divergence?
In a positive hidden divergence, the oscillator makes lower lows, whereas the price makes either a higher low or a double-bottom low. During rising corrections, this pattern is most common. Examine the above Dow Jones index divergence chart. The price was on a very strong upward trend until it experienced a significant correction. The price maintained its initial upward trend and experienced another dip. As can be seen, the price did not make new lows and ended the day higher than it began. However, if we look at the oscillator, we can see that it recorded a lower low, establishing a hidden divergence and indicating the possibility of an upward trend.
Aug 10, 2022 08:51