RSI Stocks Indicator Divergence Stocks Setups
Stocks Trading Divergence is one of the trade setups used by Stocks traders. It involves looking at a stocks chart and one more stocks technical indicator. For our example we shall use the RSI indicator.
To spot this stocks divergence trading set up find two chart points at which stocks price makes a new swing high or a new swing low but the RSI indicator doesn't, indicating a divergence between stocks price & momentum.
RSI Stocks Divergence Example:
In the stock chart below we spot two chart points, point A and point B (swing highs)
Then using RSI indicator we check the highs made by the stocks RSI technical indicator, these are highs that are directly below the stocks Chart points A and B.
We then draw one line on the stock chart & another line on the RSI indicator.
RSI Divergence Stocks Setup - Stocks Trading Divergence Stocks using RSI Technical Indicator
How to spot stocks divergence
In order to spot this stocks divergence setup we look for the following:
HH=Higher High- 2 highs but the last one is higher
LH= Lower High- 2 highs but the last one is lower
HL=Higher Low- 2 lows but the last one is higher
LL= Lower Low- 2 lows but the last one is lower
First let us look at the illustrations of these stocks terms
Divergence Stocks Terms Definition
Stocks Trading Divergence Stocks Terms Definition Examples
There are two different types of stocks divergence setups:
- Classic Stock Trading Divergence
- Hidden Stocks Trading Divergence
