![\"RSI](\"https:\/\/www.tradingheroes.com\/wp-content\/uploads\/rsi-divergence.jpg\")
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Using divergence is a popular way to identify potential trading opportunities. But how does it work and when does it stop working?<\/p>\r\n\r\n\r\n\r\n
RSI Divergence<\/strong> occurs when the Relative Strength Index indicator<\/strong> starts reversing before price does.<\/p>\r\n A bearish divergence consists of an overbought RSI reading, followed by lower high on RSI. At the same time, price must make a higher high on the second peak, where the RSI is lower. In a bullish divergence situation, there must be an oversold condition on the RSI, followed by a higher low on the RSI graph. Simultaneously, price must form a lower low on the second peak.<\/p>\r\n\r\n\r\n\r\n Now let's take a closer look at some examples of RSI divergence and how you can use it to identify potentially profitable trading opportunties.<\/p>\r\n\r\n\r\n\r\n Another way to look at RSI divergence is that RSI can show a change in price momentum, before<\/em> you see a change in price action. You can think of it as an early warning signal.<\/strong><\/p>\r\n\r\n\r\n\r\n In other words, it helps traders spot potential price reversals.<\/p>\r\n\r\n\r\n\r\nWhat is RSI Divergence?<\/h2>\r\n\r\n\r\n\r\n
RSI Divergence Examples<\/h2>\r\n\r\n\r\n\r\n