Some signals are geared towards early entry, while others appear after the trend has begun. In addition to buy and sell signals, oscillators can signal that something is amiss with the current trend or that the current trend is about to change. Even though oscillators can generate their own signals, it is important to use these signals in conjunction with other aspects of technical analysis. Most oscillators are momentum indicators and only reflect one characteristic of a security's price action. Positive and Negative Divergences Divergence is a key concept behind many signals for oscillators as well as other indicators.
Divergences can serve as a warning that the trend is about to change or set up a buy or sell signal.
In its most basic form, a positive divergence occurs when the indicator advances and the underlying security declines. A negative divergence occurs when an indicator declines and the underlying security advances. However, MACD had not turned up and the positive divergence was still just a possibility. When MACD turned up and traded above its 9-day EMA, a positive divergence was confirmed. At this point, other signals came together to create a buy signal.