thE hAnDbook of tEchnicAL AnALySiSnOte
Under the broad interpretation, any and all non‐confi rmation is regarded as
divergent and this therefore also includes any data series that are convergent
on each other. As such, divergence is a consequence of both the main and
supporting data series moving toward or away from each other.depicted in boxes (5) and (14), and the oscillators in the supporting data se-
ries do not appear to indicate any further price extension or momentum in the
direction of the current larger trend. Hence, the term confi rmation is undefi ned
in sideways formations and is best reserved for situations where a clear and ob-
vious trend is in effect.
9.2.7 broad interpretation of Divergence
It is customary to use the term divergence in a broader sense to describe any
disagreement or non‐confi rmation between the main and supporting data series.
Herein lies the confusion.
Under this wider defi nition, all combinations depicted in Figure 9.3 are now
categorized as divergent, with the exception of six combinations: four of which
have no disagreement, namely (1), (9), (10), and (18), and the remaining two being
undefi ned, that is, (5) and (14).
9.2.8 Convergence and Divergence under the broad
interpretation of Divergence
As will be shown later, a convergence of troughs and a divergence of peaks
would, under this broader interpretation, be referred to as standard bullish
and standard bearish divergence, respectively. The situation is a little more
complicated for reverse divergence, depending on whether the reverse diver-
gence is predicated on George Lane’s bull and bear setups, or on the newer
school of thought where reverse divergences are expected to represent a pure
continuation of the current larger trend. Nevertheless, regardless of whichever
it is based on, reverse divergence will, in the initial stage, still represent a con-
tinuation of the current larger trend under both approaches. With this in mind,
a convergence of peaks and a divergence of troughs would, under this broader
interpretation, be referred to as reverse bearish and reverse bullish divergence,
respectively.
9.2.9 Directionally and non‐Directionally aligned
slope Divergence and Convergence
Divergence and convergence may also be categorized according to how much
the two data series are directionally aligned with each other at the current larger
trend. See Figures 9.17 , 9.18 , and 9.19.