What's RSI Trading Divergence?

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

To spot this RSI Trading 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 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 technical indicator, these are highs which are directly below the Chart points marked A and B.

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

RSI Divergence Explanation - Bullish Divergence RSI - Bearish Divergence RSI - How Accurate is RSI Divergence Indices Trading

How to trade RSI Trading 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 Indices Trading Divergence terms

RSI Divergence Definition - Indices RSI Divergence Explained

RSI Trading Divergence Definition - RSI Divergence Indices Trading Explained - RSI Divergence Strategy Tutorial - RSI Divergence Indices Trading PDF

There are two types of indices RSI divergence setups:

1. RSI Classic Divergence
2. RSI Hidden Divergence