Stock Divergence Definition
Divergence trading concept is a concept where a trader will for a difference between the price movement with the movement of a technical indicator. For our examples we shall use the RSI indicator to explain divergence trading.
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 setups just the same way as the RSI technical indicator.
RSI Analysis & RSI Signals
RSI Divergence Indicator
RSI Bullish Divergence Setups
Classic RSI Bullish Stock Divergence Trading Setup
RSI classic bullish divergence setup occurs when price is making lower lows (LL), but the RSI indicator is making higher lows (HL).
RSI Divergence Definition
RSI classic bullish divergence warns of possible shift in the trend from downwards to upwards. This is because though the price moved lower the volume of sellers that moved trading price lower was less as illustrated and displayed by the RSI. This is an indicator of the underlying weakness of the downward trend.
Hidden RSI Bullish Divergence Trading Setup
Forms when the price is making a higher low (HL), but the RSI indicator is showing a lower low (LL).
RSI hidden bullish divergence setup occurs when there a price retracement in an up wards trend.
Indices Hidden Bullish Divergence - RSI Divergence Definition
This set-up confirms that a market retracement move is complete. This RSI divergence setup indicates the underlying strength of an upward trend.
RSI Bearish Stock Divergence
Hidden RSI Bearish Divergence Trading Setup
Forms when price is making a lower high ( LH ), but the oscillator indicator is showing a higher high ( HH ).
Hidden bearish divergence setup forms when there a retracement in a downwards trend.
Indices Hidden Bearish Divergence - RSI Divergence Definition
This set-up confirms that a market retracement move is complete. This divergence indicates strength of a downward trend.
RSI Classic bearish Stock Divergence Trading Setup
RSI classic bearish divergence setup occurs when price is making a higher high (HH), but the RSI indicator is lower high (LH).
Indices Classic Bearish Divergence - RSI Divergence Definition
RSI Classic bearish divergence signals a possible shift in trend from upward to downwards. This is because though the price moved higher the volume of buyers that moved trading price higher was less as illustrated and shown by the RSI technical indicator. This is an indicator of the underlying weakness of the upward trend.
