Divergence (the early-warning system)
What it is: price and momentum disagreeing. Price makes a NEW high, but RSI/MACD makes a LOWER high — the move is still going but the force behind it is draining.
The two types:
• Bearish: higher price high + lower momentum high = rally running on fumes
• Bullish: lower price low + higher momentum low = sellers exhausting into the decline
Why pros rank this above most signals: indicators usually CONFIRM what price already did. Divergence is one of the few that leads. It doesn't time the exact top — it tells you to tighten stops, take partials, and stop adding. Dashed red lines on the chart connect the diverging peaks.