RSI Divergence Setups - Bullish Divergence RSI and Bearish Divergence RSI

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

To spot this divergence set up find 2 chart points at which price makes and forms a new swing high or new swing low but the RSI 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 we check and analyze highs made and formed by the RSI indicator, these are highs that are directly below the Chart points A and B.

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

RSI Divergence Setup - Bullish Divergence RSI vs Bearish Divergence RSI

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

How to spot divergence

In order to identify this divergence trade setup we look and check 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 explanations of these trading 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

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

There are 2 types of divergence setups:

Classic Forex Divergence
Hidden Divergence Setup

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RSI Divergence Setups - Bullish Divergence RSI and Bearish Divergence RSI