FX Divergence Definition - RSI Divergence Indicator Analysis

Divergence concept is a concept where a trader will for a difference between the currency price movement with the movement of a indicator. For our example we shall use the RSI to illustrate divergence setups.

RSI is one of the oftenly used divergence trading indicator. This indicator is an oscillator technical indicator similar to the RSI & it can be used to trade divergence just the same way as the RSI technical indicator.

RSI Analysis and RSI Signals

RSI Trade Divergence Technical Indicator

RSI Bullish Trade Divergence Setups - RSI FX Divergence Indicator

Classic RSI Bullish Divergence

RSI classic bullish divergence occurs when the price is forming/making lower lows (LL), but the RSI is forming/making higher lows ( HL ).

RSI Divergence Indicator Analysis - How to Trade RSI Divergence Trade Signals

Classic Bullish Divergence - RSI Divergence Definition

RSI classic bullish divergence setup warns of a possible change in the trend from downward to upward. This is because even though the price went lower the volume of the sellers who pushed the price lower was less like illustrated by the RSI. This is an indicator of the underlying weakness of the downward trend.

Hidden RSI Bullish Divergence Trade Setup

Forms when price is forming/making a higher low (HL), but the RSI is displaying a lower low ( LL ).

RSI hidden bullish divergence occurs when there a retracement in an uptrend.

Hidden Bullish Divergence Trade Setup - RSI Divergence Indicator Analysis

Hidden Bullish Divergence - RSI Divergence Definition

This setup confirms that a retracement move is exhausted. This RSI divergence reflects underlying momentum of an uptrend.

RSI Bearish Trade Divergence Setup - RSI Trade Divergence Indicator

Hidden RSI Bearish Divergence Trade Setup

Forms when price is forming/making a lower high (LH), but the oscillator technical indicator is forming/making a higher high ( HH ).

Hidden bearish divergence forms when there a retracement in a downtrend.

Hidden Divergence Strategy vs Classic Divergence Strategy - How Can You Analyze Trade Divergence Signal?

Hidden Bearish Divergence - RSI Divergence Definition

This setup confirms that a retracement move is exhausted. This divergence reflects the underlying momentum of a downtrend.

RSI Classic bearish Divergence

RSI classic bearish divergence occurs when the price is forming a higher high (HH), but the RSI is making lower high ( LH ).

RSI Divergence Indicator Analysis - How Can You Interpret RSI Divergence Trading Strategies?

Classic Bearish Divergence - RSI Divergence Definition

RSI Classic bearish divergence setup signals a possible change in trend from up to down. This is because even though the price went higher the volume of the buyers who pushed the price higher was less just as is illustrated and shown by the RSI. This is an indicator of the under-lying weakness of the upward trend.

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