Bottom divergence and top divergence are a phenomenon in technical analysis that refers to the movement of technical indicators in the opposite direction to the stock price during the stock price or ** process, respectively.
Bottom divergenceIt usually appears in the low area of the stock price, when the stock price is still **, the trend of the graph composed of green bars on the MACD indicator chart is higher than the bottom, that is, when the low point of the stock price is lower than the previous low, and the low point of the indicator is higher than the previous low. This indicates that the stock price has fallen to a certain extent, the bearish power is gradually exhausted, the bullish power has begun to accumulate gradually, and the technical indicators and the stock price trend have fluctuated in the opposite direction. Bottom divergence is usually considered a signal of a bottom, indicating that the stock price may be upward in the short term, which is a signal of a short term.
Top divergenceIt usually appears in the high area of the stock price, when the stock price has been moving towards **, the trend of the graph composed of red bars on the MACD indicator chart is lower than the peak, that is, when the high point of the stock price is higher than the previous high, and the high point of the MACD indicator is lower than the previous high point of the indicator. This indicates that the bullish power is gradually exhausted, and the bearish power is beginning to accumulate gradually, causing the technical indicators to move in the opposite direction to the stock price movement. A divergence from a top is often considered a signal of a peak, indicating that the stock price is about to ** in the short term, and is a signal to sell**.
In practice, investors can make corresponding investment decisions based on the phenomenon of bottom divergence and top divergence to ** the future trend of stock prices. However, investors need to note that the effectiveness of technical indicators is not the same, so it is necessary to combine other technical indicators and market conditions when conducting technical analysis. At the same time, the occurrence of bottom divergence and top divergence does not necessarily mean that the stock price will necessarily reverse, and it needs to be analyzed and judged according to specific market conditions and technical indicators.