Bearish Divergence RSIĪ bearish RSI divergence pattern is defined on a chart when prices make new higher highs but the RSI technical indicator doesn’t make a new high at the same time. Price makes a higher low but the RSI indicator makes a lower low. Price makes a lower low but the RSI indicator makes an equal low. Price makes an equal low but the RSI indicator makes a higher low. Price makes a lower low but the RSI indicator makes a higher low. RSI Divergence indicator trading strategy | Very POWERFUL Strong Bullish Divergence In many instances a bullish divergence can be the key indication on a chart that signals the end of a downtrend and that the risk/reward ratio has shifted in the favor of the bulls. This is a signal that bearish sentiment is losing momentum with the high probability that buyers are stepping in and the market may be near a bottom on the chart’s time frame. Bullish Divergence RSIĪ bullish RSI divergence pattern is defined on a chart when price makes new lower lows but the RSI technical indicator doesn’t make a new low at the same time. An RSI divergence is saying that the indicator does not agree with the price action. This is a possible signal and set up to bet on a reversal in the direction of the market price action. When RSI stops breaking out to higher highs during an uptrend in price or breaking down to lower lows when price is in a down trend then it is said to be an RSI divergence.Ī divergence is a signal that the current trend in the time frame on the chart has lost momentum. If a chart has a RSI divergence then the relative strength index (RSI) on the chart has lower highs when price is at a higher high or the RSI makes higher lows when price makes new lower lows. A divergence shows the relation between the RSI and current price action is becoming uncorrelated. The RSI is one of the most popular oscillators used in technical analysis. The RSI shows the magnitude of a price move in a specific timeframe. RSI divergence signals show traders when price action and the RSI are no longer showing the same momentum.
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