What is Hidden Divergence?
While regular divergence hints that a trend might be ending, hidden divergence suggests the opposite — that the trend is likely to continue.
Yep, divergence isn’t just about spotting reversals… it can also help you stay confidently in a trend.
📈 Hidden Bullish Divergence
Hidden bullish divergence occurs when:
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Price forms a higher low (HL)
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But the oscillator makes a lower low (LL)
This usually shows up during an uptrend.
If price pulls back and forms a higher low, check the oscillator. If the oscillator dips even lower than before, that’s your signal — momentum is building, and the uptrend may resume.
📉 Hidden Bearish Divergence
On the flip side, hidden bearish divergence happens when:
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Price forms a lower high (LH)
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But the oscillator makes a higher high (HH)
This tends to appear during a downtrend.
So, if price attempts a rally but doesn’t break the previous high — while the oscillator does — it’s often a sign that the downtrend still has legs and may continue lower.
Quick Recap
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Regular divergence = possible trend reversal
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Hidden divergence = possible trend continuation
If you’re someone who prefers to trade with the trend (smart move!), then hidden divergence can be a powerful tool to spot opportunities to enter early or add to your position.
Sounds useful, right?
In the next lesson, we’ll walk through real-world examples of both regular and hidden divergences — and show how you could’ve traded them. Let’s keep going! 📊