What is an RSI divergence Indicator signal?

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. The RSI is one of the most popular oscillators used in technical analysis. A divergence looks at it in relation to the current price action.

What are the different types of RSI divergence?

There are two types of RSI Divergence: Bullish and Bearish. Bullish divergence occurs when the price of an asset is making lower lows, but the RSI indicator is making higher lows. This may indicate that a bullish reversal is likely to occur.

What happens if RSI divergence is spotted after Point C?

After point C, the price did reverse. When RSI divergence is spotted in the oversold or overbought territory, there is a chance of a price reversal. If an investor makes a directional bet in the direction of the price reversal with appropriate stops and targets, the wins are usually greater than the losses.

What is RSI & why is it important?

The RSI is a great indicator for anticipating future market action in choppy or trending markets by offering signals that current market sentiment has reached extreme levels. This helps with spotting reversals, profit taking and more.