Regular divergence hints at reversals. Hidden divergence hints at continuation.
Hidden bullish
In an uptrend, price makes a higher low but the oscillator makes a lower low. The pullback looked scary on the oscillator, but price structure held. Good spot to buy.
Hidden bearish
In a downtrend, price makes a lower high but the oscillator makes a higher high. Good spot to sell.
| Type | Price | Oscillator | Signal |
|---|---|---|---|
| Regular bullish | Lower low | Higher low | Reversal up |
| Regular bearish | Higher high | Lower high | Reversal down |
| Hidden bullish | Higher low | Lower low | Uptrend continues |
| Hidden bearish | Lower high | Higher high | Downtrend continues |
Wick says
Regular divergence fights the trend. Hidden divergence joins it. Joining the trend is usually more fun.
Key takeaways
- Hidden divergence = continuation signal.
- Compare lows in uptrends, highs in downtrends.
- Pairs beautifully with pullback entries.