RSI Indicator Divergence Setups - Bullish Divergence RSI and Bearish Divergence RSI

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

To spot this divergence set up find 2 chart points at which price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between price & momentum.

RSI Forex Divergence Example:

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

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

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

RSI Divergence Setup - Bullish Divergence RSI vs Bearish Divergence RSI

RSI Divergence Setup - Forex Divergence Trading using RSI Indicator - Bullish Divergence RSI and Bearish Divergence RSI

How to spot divergence

In order to identify this 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 terms

Divergence Terms Definition - RSI Bullish Divergence and RSI Bearish Divergence

Divergence Terms - RSI Bullish Divergence vs RSI Bearish Divergence

Forex Divergence Terms Definition Examples - Bullish Divergence RSI and Bearish Divergence RSI

Forex Divergence Terms Definition Examples - Bullish Divergence and Bearish Divergence RSI

There are 2 types of divergence setups:

Classic Forex Divergence
Hidden Trading Divergence Setup

Learn More Topics & Lessons:

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RSI Indicator Divergence Setups - Bullish Divergence RSI and Bearish Divergence RSI