Oszillator-Divergenz
Price and oscillator move differently. A warning sign of trend exhaustion — often a precursor to a reversal.
Core idea
A trend indicator (often RSI or MACD) should follow price. When the two diverge, the indicator signals that the move is losing momentum despite new price extremes.
Bullish vs. bearish divergence
Bearish (regular)
Price: Higher high
RSI/MACD: Lower high
Price makes a new high, but the RSI does not. Momentum breaks — top signal.
Bullish (regular)
Price: Lower low
RSI/MACD: Higher low
Price keeps falling, the oscillator does not. Sellers are losing strength — bottom signal.
Hidden divergence
Reversed logic — trend continuation instead of reversal:
Bullish hidden: price higher low, RSI lower low → pullback healthy, trend continues
Bearish hidden: price lower high, RSI higher high → bear pullback, downtrend intact
Where it works, where it doesn't
- Works well: at the end of long, mature trends; at the edge of established ranges.
- Works poorly: strong breakouts (parabolic moves), where price produces many divergences before the reversal actually arrives ("the market can stay irrational longer than you can stay solvent").
Classic indicators for divergence
- RSI — the most widespread.
- MACD — divergence between the MACD line and price; often more reliable than RSI on swing timeframes.
- OBV (On Balance Volume) — volume-based divergence, strong in crypto.
- Stochastics — noisier, useful in ranges.
Use in Botty
Currently not implemented as an active signal. Potential feature: an exit trigger when an existing long position shows a bearish RSI divergence could lock in gains faster. A candidate for the roadmap.