Top divergence means that when the K-line trend has one peak higher than the other, the stock price has been rising, while the column trend on the indicator has one peak lower than the other, this is called top divergence. Bottom divergence means that when the K-line trend is lower than the previous peak, the stock price keeps falling, while the column trend on the indicator is higher than the previous peak, this is called the bottom divergence phenomenon. Many indicators can be used for top divergence and bottom divergence. For example, trading volume, KDJ, MACD, etc., the more commonly used one is MACD. Below I will introduce to you in detail the usage of MACD top divergence and bottom divergence.
MACD, also known as the smoothed moving average of convergence and divergence, is gradually developed from the double exponential moving average. The MACD indicator is a combination of two lines and a column. Among them, the fast line (DIF), which is the short-term trend line, is a white line, the slow line (DEA), which is the long-term trend line, is a yellow line, and the histogram is BAR. Generally speaking, we generally use the point formed by the intersection of the yellow line and the white line as a wave peak to determine whether there is a top or bottom divergence. You can also directly use the histogram to determine.
Top divergence: When the K line is higher than the previous peak and the stock price is rising, the trend of the MACD yellow line and white line is lower than the previous peak, which means that the white line crosses from top to bottom twice. If the yellow line forms two wave peaks, the stock price may fall sharply, which is the top divergence. The phenomenon of top divergence generally indicates that the stock price will reverse its high level. The stock price may fall in the short to medium term, which can be regarded as a sell signal.
Bottom divergence: The K line has a lower bottom than the last, and the stock price is constantly falling, but the trend of the MACD yellow line and white line is higher than the last bottom, which means that the white line goes from bottom to top twice. If it crosses the yellow line and forms two wave peaks, the stock price may rise significantly. This is a bottom divergence. The phenomenon of bottom divergence generally indicates that the stock price will reverse from a low level. The stock price may rise in the short to medium term, which can be used as a buying signal.
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The top divergence of a stock means that the high point of the stock price is higher than the previous high point, but the high point of the indicator is lower than the previous high point of the indicator. Figure, and stock bottom divergence refers to the pattern formed by the low point of the stock price being lower than the previous low point, but the low point of the indicator being higher than the previous low point of the indicator. When a stock shows a bottom divergence pattern chart, it means that after a long-term decline in the stock, the power of the short side has been fully released, and the power of the long side has begun to gather and counterattack. The stock has bottomed out, which is a buying signal. Investors can consider buying some. When a stock has a top divergence, it means that after a long-term rise in the stock, the strength of the long side is weak and the strength of the short side is strengthening. There is no hope for the stock to continue to rise. The stock is about to start a downward trend. This is a peaking signal. Investors can consider selling their stocks. stock. What is more common is that the macd indicator or the kdj indicator appears in a divergence pattern.