What is RSI divergence in forex?
What is RSI divergence in forex?
Generally, an RSI divergence means that the RSI indicator is moving in the opposite direction compared to the price. Therefore, while the price is moving, the RSI is telling us in advance to anticipate a change in the direction.
Is RSI divergence a good strategy?
Hidden RSI Divergence is extremely strong predictor of a trend continuation or trend change. There are crazy amount of divergences happening at all the time frames. Find one, wait for the price to test it, look for the re entry price you want, confirm with other tools in your technical tool box and then trade.
How do you trade divergence with RSI?
We look for a positive RSI Divergence signal after a downtrend. The idea here is to enter at the start of a trend reversal at the bottom. We have to go to indicators and apply the ‘Relative Strength Index’ indicator with default settings. The price should be making lower lows and the RSI should be making higher lows.
What does RSI divergence indicate?
An RSI divergence indicator signal shows traders when price action and the RSI are no longer showing the same momentum. The RSI shows the magnitude of a price move in a specific timeframe.
How do you master divergence?
9 Rules for Trading Divergences
- Make sure your glasses are clean.
- Draw lines on successive tops and bottoms.
- Connect TOPS and BOTTOMS only.
- Keep Your Eyes on the Price.
- Be Consistent With Your Swing Highs and Lows.
- Keep Price and Indicator Swings in Vertical Alignment.
- Watch the Slopes.
Does divergence work in forex?
A trader can use any forex indicator to detect divergences, like MACD (moving average convergence/divergence), RSI (relative strength index), and the stochastic oscillator – a momentum indicator that is widely used in forex trading to identify potential trend reversals.