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 trading indicator. This indicator is an oscillator indicator similar to the RSI & it can be used to trade divergence set-ups just the same way as the RSI technical indicator.

RSI Analysis & RSI Signals

RSI Divergence Trading Indicator

RSI Bullish Divergence Setups

Classic RSI Bullish Stock Divergence Setup

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

Index Classic Bullish Divergence Trading Setup - RSI Divergence Indicator Divergence Analysis

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 price lower was less just as illustrated & displayed by the RSI. This is an indicator of the under-lying weakness of the downward trend.

Hidden RSI Bullish Divergence Setup

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

RSI hidden bullish divergence setup occurs when there's a price retracement in an upwards trend.

Stock Divergence Meaning - RSI Divergence Indicator Divergence Analysis

Index Hidden Bullish Divergence - RSI Divergence Definition

This set-up confirms that a market retracement move is exhausted. This RSI divergence setup shows the underlying strength of an upward trend.

RSI Bearish Stock Divergence

Hidden RSI Bearish Divergence Trade Setup

Forms when price is forming/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 Indicator Stock Divergence Technical Analysis

Index Hidden Bearish Divergence - RSI Divergence Definition

This set-up confirms that a market retracement move is exhausted. This divergence reflects power of a downward trend.

RSI Classic bearish Stock Divergence Setup

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

Classic bearish divergence - RSI Divergence Indicator Divergence Analysis

Index 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 price higher was less like is illustrated & displayed and shown by the RSI technical indicator. This is an indicator of the underlying weakness of the upward trend.

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