RSI Indicator Divergence Trade Setups

Divergence is one of the trade setups used by traders. It involves looking at a chart & one more indicator. For our example we shall use the RSI indicator.

To spot this xauusd divergence trading set up find two chart points at which xauusd price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between xauusd price and momentum.

RSI Divergence Example:

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

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

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

RSI Divergence Gold Setup - Trade Divergence using RSI Indicator

How to spot trade divergence

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

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 the illustrations of these gold trading terms

Divergence Gold Trading Terms Definition

Trade Divergence Terms Definition Example

There are two different types of trade divergence setups:

1. Classic XAUUSD Trading Divergence
2. Hidden Gold Trading Divergence