Divergence Cheat Sheet.

Overview

A reference, not a detector.

This chart tool is a cheat sheet for recognizing divergence between price and an indicator such as RSI or MACD. It explains the idea of comparing corresponding swing highs or lows rather than asking you to memorize every pattern. The cheat sheet does not automatically find, validate, or alert on a divergence.

Regular divergence

Look for disagreement at a swing.

A regular bullish divergence generally compares a lower price low with a higher indicator low. A regular bearish divergence generally compares a higher price high with a lower indicator high. These relationships can suggest that momentum is not matching the latest price extreme, but price can continue moving in the same direction.

The publication also distinguishes stronger and weaker-looking examples using equal highs or lows. Such labels are descriptive rather than measured odds of success.

Hidden divergence

Use trend context first.

Hidden divergence is usually considered in a trend and compares a price retracement with a different oscillator swing. For example, an uptrend can produce a higher price low while its indicator makes a lower low; a downtrend can produce a lower price high while its indicator makes a higher high. This is often discussed as a possible continuation clue, not a standalone entry.

Practical limits

Choose matching pivots carefully.

Compare swings that correspond in time and use a consistent indicator and timeframe. Picking unrelated pivots can make a divergence appear where none is useful. A higher timeframe may provide different context from a noisy lower one. Confirm the chart pattern and manage risk independently.