THE BULLISH

In a bullish HD, the indicator

makes a lower low, but price

makes either a higher low or a

double-bottom low. This type of

nonconfirmation occurs mainly

during corrective declines in an uptrend, but it may also be found on occasion at price retests of

the lows. Bullish HDs indicate underlying strength in the

security and often make good entry or re-entry points.

During its spectacular rise (and before its equally spectacular

decline), Micron Technology [MU] displayed many bullish

hidden divergences (Figure 2) in 1995. At point 2, the indicator

made a lower low than it had at point 1, but price made a higher