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RSI Indicator Divergence Trade Setups

A divergence setup is one technique gold traders employ: it requires examining both the chart and at least one additional indicator for confirmation. For this demonstration, we will utilize the RSI.

Look for XAUUSD divergence by finding two chart points. The price hits a new high or low, but RSI stays flat. This shows a gap between gold price and momentum.

RSI Divergence Example:

In the chart below we identify 2 points, point A and point B (swing highs)

By using RSI, traders analyze peaks formed by it, specifically those directly linked to Chart points A and B for detailed insights.

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

RSI Divergence Trading Setups - RSI Divergence RSI Indicator Divergence RSI Divergence Guide

RSI Divergence Trading Setup - Trade Divergence using RSI Indicator

How to identify divergence setup

In order to spot this xauusd trade divergence setup we look for the following:

HH = Higher High - 2 highs but the last is higher

LH = Lower High : 2 highs but last one is lower

HL = Higher Low : two lows but the last is higher

LL = Lower Low : 2 lows but the last one is lower

First let us look at the illustrations of these trading terms

Divergence XAU/USD Terms Definition - RSI Indicator Divergence Trading Setups - RSI Divergence Strategies PDF

Divergence Terms Definition

RSI Indicator Divergence Trading Setups - How to Spot RSI Divergence Patterns

Trade Divergence Terms Definition Example

There are two different types of trade divergence setups:

  1. Classic Divergence
  2. Hidden Divergence Trading Setup

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