Delta Divergence
Order Flow Analysis glossary · Footprint & Delta Analysis
Definition
A condition in which price and cumulative delta move in opposite directions, signalling that the participants visible in the tape are not the ones driving the new extreme. In a bearish divergence, price prints a new high but cumulative delta fails to make a new high (or the bar's delta is negative) — buyers are not driving the high, so it is vulnerable. In a bullish divergence, price prints a new low but cumulative delta fails to make a new low (or the bar's delta is positive) — sellers are not driving the low, so it is vulnerable.
Delta Divergence in plain English
Delta divergence is when the price and the buying-vs-selling pressure disagree — price is going one way, but the eager-trader tally is pointing the other. That disagreement whispers that the people actually hitting trades aren't the ones pushing price to its new extreme, so the extreme is shaky. For example, if price makes a new high but aggressive buyers aren't really behind it (the pressure gauge doesn't confirm), the high is vulnerable to snapping back. It's like a runner crossing the finish line looking exhausted — the result is there, but the strength behind it clearly isn't, so don't bet on them sprinting further.
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