RSI Divergence Technical Indicator Analysis
Divergence concept is a concept where one will for a difference between the price movement with the movement of a technical indicator. For our example we shall use the RSI technical indicator to explain divergence trading.
RSI indicator is one of the often used divergence technical indicator. This indicator is an oscillator trading similar to the RSI & it can be used to trade divergence just the same way as the RSI indicator.
RSI Analysis & RSI Signals
RSI Divergence Technical Indicator
RSI Divergence Technical Indicator
Classic RSI Bullish Divergence Trading Setup
RSI classic bullish divergence forms when the price is forming lower lows ( LL ), but RSI indicator is making higher lows (HL).
Gold Classic Bullish Divergence - RSI Divergence Definition
RSI classic bullish divergence warns of possible shift in the trend from downward to upwards. This is because even though the price moved lower the volume of sellers that moved price lower was less as shown by RSI technical indicator. This demonstrates under-lying weakness of the downwards trend.
Hidden RSI Bullish Divergence Setup
Forms when the price is forming higher low ( HL ), but RSI indicator is making lower low (LL).
RSI hidden bullish divergence occurs when there is a retracement in an up wards trend.
Gold Hidden Bullish Divergence - RSI Divergence Definition
This set up confirms that a retracement move is exhausted. This RSI divergence setup shows underlying strength of an upwards trend.
RSI Divergence Technical Indicator
Hidden RSI Bearish Divergence Setup
Occurs when the price is forming lower high ( LH ), but indicator is making a higher high ( HH ).
Hidden bearish divergence occurs when there's a retracement in a downwards trend.
Gold Hidden Bearish Divergence - RSI Divergence Definition
This set up confirms that a retracement move is exhausted. This divergence indicates the under-lying strength of a downward trend.
RSI Classic bearish Divergence Trading Setup
RSI classic bearish divergence occurs when price is showing higher high ( HH ), but the RSI technical indicator is forming lower high (LH).
Gold Classic Bearish Divergence - RSI Divergence Definition
RSI Classic bearish divergence signals a possible shift in trend from upward to downwards. This is because even though the price moved higher the volume of buyers that moved price higher was less as shown by RSI technical indicator. This demonstrates under-lying weakness of the upwards trading trend.
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