It is very simple to tell the difference. When the indicator moves in the same direction as the price, this is referred to as confirmation. Rising prices are accompanied by an indicator that is also rising. In the opposite direction, if the price is falling, the indicator falls with it.

In trading, divergence and confirmation are key concepts used to analyze market trends, but they serve opposite purposes. Divergence occurs when an asset’s price moves in the opposite direction of a technical indicator (e.g., RSI or MACD), signaling a potential trend reversal. For example, if prices make higher highs while the RSI makes lower highs, it suggests weakening momentum (bearish divergence). On the other hand, confirmation happens when price action and indicators align, reinforcing the current trend. For instance, if prices rise alongside increasing trading volume and a rising MACD, it confirms bullish strength. While divergence warns of possible trend changes, confirmation validates existing trends, helping traders decide whether to enter, hold, or exit positions. Both concepts are crucial for technical analysis but require careful interpretation to avoid false signals.