Hidden divergence mirrors the regular kind: there price makes a new extreme and the indicator does not; here it is the other way round. Price did not make a new extreme, the indicator did.
The conditions
Hidden bullish. A low above the previous one — price pulled back, but not as deep. Meanwhile the indicator reads lower at that low than at the previous one. In shorthand: price HL, indicator LL.
Hidden bearish. A high below the previous one while the indicator reads higher at it: price LH, indicator HH.
The conditions are checked the same way as for the regular kind: with a threshold on the size of the divergence and a small tolerance in time when reading the indicator at a pivot.
Where the name comes from
In the regular kind the mismatch is plain to see: price goes up, the indicator goes down. In the hidden kind both series formally move the same way, and the mismatch hides in how deep each one pulled back. Hence "hidden" — also called reverse.
One pair of pivots, one verdict
For a pair of extremes the check runs down one branch and yields either a regular divergence, a hidden one, or nothing. They cannot combine: the price conditions are mutually exclusive — an extreme is either exceeded or it is not.
That is worth remembering when the urge arises to "stack signals". There is nothing to stack: one pair of peaks holds exactly one divergence, or none.
The MACD zero rule
The MACD histogram carries an extra condition, and it applies to hidden divergences too: between the two peaks being compared, the histogram must cross zero. This is Elder's rule, and its point is to make sure the two peaks belong to different impulses rather than to one that noise happened to split into two humps.
RSI has no equivalent: it does not oscillate around zero but lives in a 0–100 band.
What hidden divergence does not say
Like the regular kind, it describes what already happened: the pullback came out shallower than the previous one while the indicator went further. It is not a signal and not a forecast, just one property of a stretch of chart.