Regular Divergence:
- Higher highs in price and lower highs in the oscillator which indicate a trend reversal from up to down.
- Lower lows in price and higher lows in the oscillator which indicate a trend reversal from down to up.
Hidden Divergence:
- Lower highs in price and higher highs in the oscillator which indicate a confirmation of the price trend which is down.
- Higher lows in price and lower lows in the oscillator which indicate a confirmation of the price trend which is up.
In order for divergence to exist, price must have either formed one of the following:
- Higher high than the previous high
- Lower low than the previous low
- Double top
- Double bottom
