Forex Trading Divergence Example - RSI Divergence Indicator Technical Analysis

Divergence trading 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 technical indicator. This indicator is an oscillator similar to the RSI and it can be used to trade divergence setups just the same way as the RSI indicator.

RSI Forex Divergence Example

RSI Indicator Divergence Example

RSI Bullish Divergence Example - RSI Divergence Indicator

Classic RSI Bullish Forex Trading Divergence Setup

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

Classic Bullish Divergence - RSI Divergence Examples

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

Hidden RSI Bullish FX Trading Divergence

Forms when price is making a higher low (HL), but the RSI technical indicator is showing a lower low ( LL ).

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

Hidden Bullish Divergence - RSI Divergence Examples

This divergence example set-up confirms that a retracement move is complete. This RSI divergence setup indicates underlying strength of an uptrend.

RSI Bearish Divergence Example - RSI Divergence Indicator

Hidden RSI Bearish Forex Trading Divergence Setup

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

Hidden bearish divergence setup occurs when there is a retracement in a downtrend.

Hidden Bearish Divergence - RSI Forex Divergence Examples

This divergence example set-up confirms that a retracement move is complete. This divergence indicates underlying strength of a downtrend.

RSI Classic bearish FX Trading Divergence

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

Classic Bearish Divergence - RSI Forex Divergence Examples

RSI Classic bearish divergence warns of a possible change in forex trend from up to down. This is because even though the price went higher the volume of buyers that pushed the price higher was less as illustrated by the RSI indicator. This is an technical indicator of the underlying weakness of the upwards trend.