iCharts Discussions

[adsingh101]

I know what is Negative Divergence, Iwant to know about Possitive Divergence. Please Help by giving examples ( if possible)

[casper]

i think what u call positive and negative divergence is what i hv learned as bullish and bearish divergence

A bullish divergence occurs when the stock makes a lower low and RSI forms a higher low. RSI does not confirm the lower low and this shows strengthening momentum.
A bearish divergence forms when the stock records a higher high and RSI forms a lower high. RSI does not confirm the new high and this shows weakening momentum.

attached picture shows Ebay with a bearish divergence in August-October. The stock moved to new highs in September-October, but RSI formed lower highs for the bearish divergence. The subsequent breakdown in mid October confirmed weakening momentum.

and then during early march the stock made the lower high but RSI makes a higher high, showing the strength of the momentum which proved in the following rally in april. it is true for any oscillator type indicators

(im sorry could not get any chart from ichart showing both divergence so had to download one from Google)

[Ravi_S]

adsingh101

Please go through this thread when you have time...

http://www.icharts.in/forum/trading-divergences-t2170,postorder,desc,start,70.html

Regards
Ravi