Divergence Analysis
Figure 9.30 Standard Bearish Divergence via Adjacent Peak to Peak Analysis.Figure 9.31 Standard Bullish Divergence via Adjacent Trough to Trough Analysis.Figure 9.30. Falling peaks in the supporting data series indicate diminishing mo-
mentum, which is potentially bearish for price. Figure 9.31 illustrates standard
bullish divergence where a potential reversal to the upside current larger trend
as observed at the point of non‐confirmation. Rising troughs in the supporting
data series indicate strengthening momentum, which is bullish for price. Price is
expected to reverse and subsequently move in the direction of the supporting data
series in both standard bullish and bearish divergences.
Examples given in Figures 9.30 and 9.31 expand on illustration (3) in
Figure 9.43, and illustration (16) in Figure 9.44, respectively.
Figure 9.32 is a chart of price and its moving average convergence diver-
gence (MACD) indicator displaying standard bullish and bearish divergence. Also