Divergence
Price making a new high/low while a momentum indicator fails to confirm — a warning that the current move may be losing steam.
Divergence occurs when price and a momentum oscillator disagree. Bearish divergence: price makes a higher high but the indicator makes a lower high — momentum is fading on the new high. Bullish divergence: price makes a lower low but the indicator makes a higher low — selling pressure is weakening.
Divergence is a warning, not a trigger. Price can stay divergent for multiple bars before resolving. It is most reliable at key structural levels (major support/resistance, Fibonacci zones) and on higher timeframes. Divergence into thin air (no structural support) has poor follow-through.
On the desk
RSI on the daily chart of Gold prints lower highs (65 → 58) while price makes successive new highs. The bearish divergence, appearing right below a key resistance zone, precedes a 4% correction.