What's RSI Divergence?

RSI Divergence Trading is one of the strategy used by online stock traders to analyze chart stock price movement. RSI Divergence involves looking at a stock chart & one more technical indicator - RSI indicator. For our this stock trade divergence courses we shall use the RSI indicator - RSI Divergence.

To spot this RSI divergence setup find 2 chart points at which price makes a new swing high or a new swing low but the RSI indicator does not do the same, thus indicating that there's a divergence between the price and momentum.

RSI Indices Trading Divergence Example:

In the chart below we spot two chart points, chart point A and chart point B ( swing highs )

Then using RSI indicator we check highs made by RSI indicator, these are highs which are directly below the Chart points marked A and B.

We then draw one line on the chart & another line on the RSI indicator.

RSI Divergence Meaning - RSI Indices Trading Divergence Tutorial - RSI Divergence Trading Strategy Course - RSI Divergence Guide

How to trade RSI divergence

In order to trade RSI divergence setup we look for the following setups:

HH - Higher High - two highs but the last one is higher

LH - Lower High - two highs but the last one is lower

HL - Higher Low - two lows but the last one is higher

LL - Lower Low - two lows but the last one is lower

First let us look at examples of these trade divergence terms

RSI Divergence Meaning - Indices RSI Divergence Guide

RSI Divergence Definition - RSI Divergence Guide - RSI Divergence Strategy Tutorial - RSI Divergence Trading PDF

There are two types of RSI divergence setups:

1. RSI Classic Divergence
2. RSI Hidden Divergence