RSI Divergence Indicator

Definition A divergence occurs when an asset’s price is moving opposite to a specific technical indicator or is moving in a different direction from other relevant data. The divergence indicator warns traders and technical analysts of changes in a price trend, oftentimes that it is weakening or changing direction. Divergence can be either positive, signifying the possibility of a move that is higher in the asset’s price, or it can be negative, signifying the possibility of a move that is lower in the asset’s price. Takeaways Divergence often works with other indicators and data. It is usually used by technical analysts and traders when the asset’s price is moving counter to the direction of another indicator. As mentioned above, positive divergence indicates that the price could start rising and usually occurs when the price is moving lower, but while another indicator counters this direction by moving higher. In other words, showing bullish signals. Negative divergence indicates that the price could start declining and usually occurs when the price is moving higher, while another indicator moves lower as well. In other words, showing bearish signals. What to look for Divergence is most often used to track and analyze the momentum in an asset’s price and the odds of a price reversal within the current trend. While using divergence, traders and analysts can decide on whether or not they would like to exit the position or set a stop loss in the case the divergence is negat