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 stocks indicator.
To spot this stocks divergence trading setup find two chart points at which stocks price makes a new swing high or a new swing low but the RSI stocks indicator does not, indicating a divergence between stocks price and momentum.
RSI Stocks Trading Divergence Example:
In the stock chart below we identify two chart points, point A and point B (swing highs)
Then using RSI stocks indicator we check the highs made by the stocks RSI indicator, these are the highs that are directly below the stocks Chart points A and B.
We then draw one line on the stock chart and another line on the RSI stocks indicator.
RSI Divergence Stocks Setup - Stocks Trading Divergence Stocks using RSI Stocks Indicator
How to spot stocks divergence
In order to spot this stocks 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 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
