MACD Divergence

What is MACD Divergence?

The MACD Divergence module detects bullish and bearish divergences between price and the MACD oscillator. These divergences often appear before major price reversals and help traders catch early signals of trend exhaustion.

This is a non-lagging system. Divergences are detected in real time and plotted immediately after confirmation, with 1 bar delay.

• Bullish Divergence: Price forms a lower low while MACD forms a higher low.
• Bearish Divergence: Price forms a higher high while MACD forms a lower high.

Visuals include:

• Divergence lines on the MACD pane
• Optional labels on the price chart

Hidden Divergence (Trend Continuation)

While regular divergence signals a potential trend reversal, Hidden Divergence is a powerful tool used to identify trend continuation.

It suggests that the current trend is gathering strength during a pullback and is likely to resume its original direction.

How it Works

• Hidden Bullish Divergence: Occurs during an uptrend. Price forms a higher low, but the MACD oscillator forms a lower low.

This indicates that despite a deeper drop in momentum, the price floor is holding higher than before, signalling a high-probability continuation of the move up.

• Hidden Bearish Divergence: Occurs during a downtrend. Price forms a lower high, but the MACD oscillator forms a higher high.

This indicates that even though momentum spiked higher, the price failed to break the previous peak, signaling a continuation of the move down.

Settings

Located in the MACD Divergence section of the settings panel: