Forex Divergence Definition - RSI Indicator Divergence Technical Analysis

Divergence trading concept is a concept where a trader will for a difference between the currency price movement with the movement of a technical indicator. For our example we shall use the RSI technical indicator to explain divergence trading.

RSI indicator is one of the oftenly used divergence technical 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 indicator.

RSI Forex Trading Technical Analysis & RSI Signals

RSI FX Trading Divergence Indicator

RSI Bullish FX Trading Divergence Setups - RSI Forex Trading Divergence Indicator

Classic RSI Bullish Forex Trading Divergence Setup

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

Classic Bullish Divergence - RSI Forex Divergence Definition

RSI classic bullish divergence warns of a possible change in the forex trend from down to up. This is because even though the price went lower the volume of sellers who pushed the price lower was less as illustrated by the RSI indicator. This is an technical indicator of the underlying weakness of the downwards trend.

Hidden RSI Bullish FX Trading Divergence Setup

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

RSI hidden bullish divergence occurs when there is a retracement in an uptrend.

Hidden Bullish Divergence - RSI Forex Divergence Definition

This set-up confirms that a retracement move is complete. This RSI divergence setup indicates underlying strength of an uptrend.

RSI Bearish Forex Trading Divergence - RSI FX Trading Divergence Indicator

Hidden RSI Bearish FX Trading Divergence Setup

Forms when price is making a lower high (LH), but the oscillator technical indicator is showing a higher high ( HH ).

Hidden bearish divergence forms when there is a retracement in a downtrend.

Hidden Bearish Divergence - RSI Forex Divergence Definition

This set-up confirms that a retracement move is complete. This divergence indicates underlying strength of a downtrend.

RSI Classic bearish Forex Trading Divergence Setup

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

Classic Bearish Divergence - RSI Forex Divergence Definition

RSI Classic bearish divergence warns of a possible change in the forex trend from up to down. This is because even though the price went higher the volume of buyers that pushed the price higher was less as illustrated by the RSI indicator. This is an technical indicator of the underlying weakness of the upwards trend.