Divergence
Disagreement between price direction and a technical indicator that may signal changing momentum but does not confirm a reversal.
Momentum, relative-performance, oscillator, divergence, and money-flow concepts used to evaluate the speed and persistence of price movement.
Momentum and strength indicators transform price, return, or volume data into measures of recent market behavior. They can help analysts compare performance or define repeatable signals, but they do not establish fair value or guarantee future direction.
Start with Momentum for rate of price change, Relative Strength for benchmark-relative performance, and RSI for the bounded gain-versus-loss oscillator. Use Divergence when price and an indicator move differently.
| Concept | Inputs | Output or question |
|---|---|---|
| Momentum | One asset’s current and prior prices | How much or how quickly did price change? |
| Relative strength | Asset and benchmark prices or returns | Did the asset outperform the comparison? |
| RSI | One asset’s average gains and losses | How strong was recent momentum on a 0 to 100 scale? |
| Divergence | Matched price and indicator swings | Are price and the indicator moving differently? |
| Money-flow indicator | Price and volume-derived inputs | Does a formula suggest stronger buying or selling pressure? |
A stock can rise faster than its benchmark, giving it positive relative strength, while RSI is falling because its latest gains are smaller than its earlier gains. The stock may still be in an uptrend even though momentum is slowing. These observations are compatible because each measure answers a different question.
For public context, see FINRA’s overview of momentum investing and the CFTC Futures Glossary.
This section is for financial education only. It does not provide personalized investment, trading, legal, tax, or regulatory advice.
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Disagreement between price direction and a technical indicator that may signal changing momentum but does not confirm a reversal.
Know Sure Thing (KST) explained: how this multi-period momentum oscillator is calculated, interpreted, compared, and used with appropriate risk controls.
Rate and persistence of price change over a chosen interval, used in technical analysis and momentum-based investment strategies.
Money Flow Index explained: its price-and-volume formula, a simple calculation example, common interpretations, and important limitations.
Comparative price performance of one security, portfolio, or market against a benchmark or peer over the same period.
Momentum oscillator from 0 to 100 that compares an asset's average recent gains with its average recent losses.
Technical indicators explained: major indicator families, how signals are constructed, a practical example, and the risks of lag, overfitting, and false confirmation.