Index Divergence Example

Divergence trading has two setups and these are bullish & bearish divergence set-ups. For each of these trading setups there is also classic divergence and hidden divergence, these trading setups are explained below.

RSI indicator is one of the commonly and often used divergence trading indicator. This indicator is an oscillator trading similar to the RSI & it can be used to trade divergence trading setups just the same way as the RSI indicator.

RSI Divergence Example

RSI Indicator Divergence Example

RSI Bullish Divergence Example

Classic RSI Bullish Stock Divergence Setup

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

Example of Different Divergence Index Setups

RSI Divergence Examples

RSI classic bullish divergence setup warns of a possible change in the trend from downwards to upwards. This is because even though the price moved lower the volume of sellers that moved price lower was less as illustrated & displayed by RSI. This is a technical indicator of the underlying weakness of the downward trend.

Hidden RSI Bullish Indices Divergence Setup

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

RSI hidden bullish divergence occurs when there's a retracement in an up-wards trend.

Divergence Example - Example of Different Divergence Setups

Index Hidden Bullish Divergence - RSI Divergence Examples

This divergence illustration set-up confirms that a retracement move is exhausted. This RSI divergence setup shows underlying power of an upwards trend.

RSI Bearish Divergence Example

Hidden RSI Bearish Stock Divergence Setup

Forms when stocks price is forming/making a lower high ( LH ), but oscillator indicator is showing a higher high ( HH ).

Hidden bearish divergence set-up forms when there's a retracement in a down-wards trend.

Index Hidden Bearish Divergence Setup - Example of Different Divergence Index Setups

Index Hidden Bearish Divergence - RSI Divergence Examples

This divergence setup illustration set-up confirms that a retracement move is exhausted. This divergence indicates underlying strength of a downwards trend.

RSI Classic bearish Stock Divergence Trade Setup

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

Index Divergence Example - Identifying Divergence Setup in Charts

Index Classic Bearish Divergence - RSI Divergence Examples

RSI Classic bearish divergence signals a possible shift in trend from upward to downwards. This is because even though the price moved higher the volume of buyers that moved price higher was less as illustrated & displayed and shown by the RSI indicator. This is a technical indicator of the underlying weakness of the upward trend.

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