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Do Bounded (Overbought/Oversold) Oscillators show divergence?

Do Bounded (Overbought/Oversold) Oscillators show divergence from price? Examples of Bounded (OB/OS) Oscillators are CCI, Stochastics, Williams %R, and RSI.

I know that Unbounded Oscillators (Momentum Indicators) like MACD and TRIX can show divergence. I am not familiar with OB/OS oscillators showing divergence, in particular, CCI and Stochastics. Please comment if you have seen this.

I am guessing RSI might show divergence, but I never noticed this or paid attention to it because it is not a momentum indicator. RSI is meant to show extremes (OB/OS).

Best Answer


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    Thanks dreamtalk. I guess I just got into the habit where I was aware of divergences in only the unbounded momentum indicators like MACD and TRIX. I never looked for divergences in the OB/OS indicators since I used them only for OB/OS. CCI, RSI, and Stochastics like you pointed out show divergences.
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    Finally, here is what I was trying to ask and point out: Does anyone use bounded oscillators for divergence? I generally do not since I use them for OB/OS. Maybe divergence is more pertinent to the unbounded oscillators since I see the two in discussions more often. I do not believe, but not sure, that ChartSchool distinguishes the difference of divergence between bounded and unbounded oscillators and which is more useful.
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