Trade Divergence Example - RSI Divergence Indicator Analysis
Divergence has two setups and these are bullish & bearish divergence setups. For each of these setups there is also classic divergence and hidden divergence, these setups are explained below.
RSI indicator is one of the oftenly used divergence indicator. This indicator is an oscillator similar to the RSI & it can be used to trade divergence just the same way as the RSI.
RSI Divergence Example
RSI Indicator Divergence Example
RSI Bullish Divergence Example - RSI Divergence Indicator
Classic RSI Bullish Forex Trade Divergence Setup
RSI classic bullish divergence occurs when price is forming lower lows (LL), but RSI is making higher lows ( HL ).
Classic Bullish Divergence - RSI Divergence Example
RSI classic bullish divergence setup warns of a possible change in the trend from downward to upward. This is because even though the price headed lower the volume of the sellers that pushed the price lower was less as illustrated by RSI indicator. This is an indicator of the underlying weakness of the downwards trend.
Hidden RSI Bullish Trade Divergence
Forms when the price is making a higher low ( HL ), but the RSI indicator is showing a lower low ( LL ).
RSI hidden bullish divergence occurs when there's a retracement in an uptrend.
Hidden Bullish Divergence - RSI Divergence Example
This divergence example set-up confirms that a market price retracement move is exhausted. This RSI divergence indicates underlying strength of an uptrend.
RSI Bearish Divergence Example - RSI Divergence Indicator
Hidden RSI Bearish Forex Trade Divergence Setup
Forms when the price is forming a lower high (LH), but oscillator indicator is making a higher high ( HH ).
Hidden bearish divergence occurs when there's a retracement in a downtrend.
Hidden Bearish Divergence - RSI Divergence Example
This divergence example set-up confirms that a market price retracement move is exhausted. This divergence indicates underlying strength of a downtrend.
RSI Classic bearish Trade Divergence
RSI classic bearish divergence occurs when price is forming a higher high (HH), but RSI is making lower high ( LH ).
Classic Bearish Divergence - RSI Divergence Example
RSI Classic bearish divergence signals a possible reversal in forex trend from upward to downward. This is because even though the price headed higher the volume of the buyers that pushed the price higher was less as illustrated by RSI indicator. This is an indicator of the underlying weakness of the upwards trend.