RSI Energies Trading Indicator Divergence Trade Setups

Trade Divergence is one of the trade setups used by traders. It involves looking at a chart & one more technical indicator. For our example we shall use the RSI technical indicator.

To spot this divergence setup find two chart points at which price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between price & momentum.

RSI Trade Divergence Example:

In the chart below we spot two chart points, point A and point B (swing highs)

Then using RSI technical indicator we check the highs made by the energies RSI indicator, these are highs that are directly below the Chart points A and B.

We then draw one line on the chart and another line on the RSI technical indicator.

RSI Divergence Energies Setup - Trade Divergence Energies using RSI Energies Trading Indicator

How to spot divergence

In order to spot this 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 energies terms

Divergence Energies Terms Definition

Trade Divergence Energies Terms Definition Examples

There are two different types of divergence setups:

1. Classic Energies Trading Divergence
2. Hidden Energy Trading Divergence