Divergence¶
Divergence occurs when price and a momentum oscillator move in opposite directions — price prints a new high or low that the indicator fails to confirm. Bearish divergence forms when price makes a higher high while the oscillator makes a lower high, signaling fading upside momentum. Bullish divergence is the mirror: price makes a lower low while the oscillator makes a higher low, signaling exhausted selling pressure.
HOW IT WORKS¶
Identify two successive swing highs (or lows) on the price chart, then compare the oscillator readings at those same two pivots. If the slopes disagree, divergence is present. A second type — hidden divergence — signals trend continuation rather than reversal: in an uptrend, price forms a higher low while the oscillator forms a lower low, confirming the pullback is a pause. Divergence is a warning gauge, not a timing tool; it requires a confirming trigger — such as a trendline break or support failure — before it is actionable. Strong trends can sustain divergence for extended periods, making it unreliable as a standalone entry signal.
IN TAPEBOARD¶
In the Tapeboard terminal, overlay RSI or the MACD histogram on any chart and use the pivot marker to tag successive swing highs and lows on both the price panel and the indicator panel simultaneously. Tapeboard's divergence scanner flags pairs where the oscillator slope disagrees with the price slope across a user-defined minimum bar separation — defaulting to 10 bars — and optionally filters results to pivots where RSI is above 70 or below 30. Multi-timeframe mode lets you surface daily divergence signals that align with a weekly overbought or oversold reading, reducing noise from intraday-only setups.