Momentum Divergence Worth Watching
Not every divergence is a trade. Here is a practical filter for when RSI or MACD disagreement with price deserves attention.
Divergence between price and momentum indicators appears constantly. Most of it resolves as noise. The divergences that matter tend to form at the edge of a mature move, after an extended run, and align with a higher-timeframe level or structure zone.
A useful filter: require price to make a clear swing extreme, require the oscillator to disagree on that swing, and require the higher timeframe to be stretched or approaching a known structure area. Without that confluence, treat divergence as a note in your journal, not an order.
In class we annotate twenty recent divergences and score which ones preceded meaningful turns. The pattern that emerges is rarely the indicator alone — it is context plus momentum disagreement.