Bearish Divergence
A condition in which price makes a higher high while an oscillator makes a lower high.
How it is identified
Test: current price high > previous price high, while current indicator high < previous indicator high
Unit
qualitative
In depth
The mirror of bullish divergence, and subject to the same mechanical caveat: an advance that decelerates while continuing must produce this pattern in any momentum oscillator, whether or not anything meaningful is happening. In strong sustained moves it can appear many times without a reversal, which is why traders speak of divergence failing. Its practical use, if any, is as one input among several rather than as a standalone trigger. Nothing here forecasts a decline from a bearish divergence.
Worked example
Price makes a high of ₹560 against an earlier ₹536 while MACD reads 6.8 against an earlier 9.4. The condition is met, and it would also be met at a subsequent high of ₹580 with MACD at 5.1.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Bearish Divergence” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.