Divergence (RSI divergence)

In a bearish divergence, price makes a higher high while the oscillator makes a lower high: the rally continues, but with less momentum behind it. In a bullish divergence, price makes a lower low while the oscillator makes a higher low, suggesting selling pressure is fading. Hidden divergences, the reverse configuration, are read as signs that a trend will continue after a pullback.

The RSI is the most common tool for spotting divergences in crypto, followed by the MACD and volume-based indicators. They are frequently cited at market tops and bottoms, for instance when bitcoin sets a new high on the weekly chart while the weekly RSI peaks lower than before.

A divergence describes weakening momentum, not a reversal. Strong trends can show several divergences in a row while price keeps going, and the signal is easy to see after the fact but ambiguous in real time. Most traders use it as a reason to tighten stops or wait for a confirming break rather than to trade against the trend.