Glossary term
Divergence (Technical)
A disagreement between price and a confirming indicator such as RSI or MACD, flagging a potential trend exhaustion.
Divergence is the technical condition where price and a confirming indicator, most often RSI or MACD, move in opposite directions. A bearish divergence has price making a higher high while the indicator makes a lower high; a bullish divergence has price making a lower low while the indicator turns up. Either way, it signals that the momentum behind the prevailing trend may be fading.
It matters as an early read on trend exhaustion, but it is unreliable as a trigger on its own: divergences can persist for a long time while price keeps trending, so acting on the first one is a common way to fight a trend too early. It describes weakening conviction, not a confirmed turn.
Closelooknet uses divergence as a confirmation filter rather than a standalone signal. A divergence by itself changes nothing; a divergence that lines up with a regime shift in the Money Temperature read, or with a moving-average stack flip, opens a review window.
In practice, an index printing a fresh high while RSI prints a lower high is a textbook bearish divergence: Closelooknet logs it and waits for a second, confirming signal before treating the trend as genuinely at risk.