Positive Divergence

Positive divergence is a term used in technical analysis to describe a situation where a security’s price and a related indicator are moving in opposite directions. In other words, the price of the security is decreasing while the indicator is increasing, or vice versa. This divergence can be used to identify potential trading opportunities, as it may indicate a reversal in the security’s price trend. Positive divergence is the opposite of negative divergence, which occurs when the security’s price and the indicator are both moving in the same direction.

History of Positive Divergence

The concept of positive divergence was first introduced by Charles Dow, the founder of Dow Theory. Dow Theory is a set of principles that form the basis of technical analysis, and it states that the market is made up of three movements: primary, secondary, and minor. According to Dow Theory, positive divergence occurs when the primary trend is in the process of reversing, and the secondary trend is in the opposite direction. This divergence can be used to identify potential trading opportunities.

Comparison Table

Summary

Positive divergence is a term used in technical analysis to describe a situation where a security’s price and a related indicator are moving in opposite directions. This divergence can be used to identify potential trading opportunities, as it may indicate a reversal in the security’s price trend. Positive divergence is the opposite of negative divergence, which occurs when the security’s price and the indicator are both moving in the same direction. For more information about this term, you can visit websites such as Investopedia, The Balance, and Investing.com.

See Also

• Technical Analysis
• Dow Theory
• Price Trend
• Indicator
• Reversal
• Support and Resistance
• Moving Average
• Relative Strength Index (RSI)
• Bollinger Bands
• Momentum

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