🐸 RSI (Relative Strength Index) divergences refer to a technical analysis tool used to identify potential trend reversals or continuations in the price of a financial asset. RSI is a popular momentum oscillator that measures the speed and change of price movements. It oscillates between 0 and 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions.
💥 Divergences occur when the price of an asset moves in a different direction than the RSI
indicator, suggesting a potential shift in the underlying trend. There are two main types of
RSI divergences:
💥 Bullish Divergence: This occurs when the price of an asset forms a lower low, but the RSI
indicator forms a higher low. It suggests that the selling pressure is weakening, and a bullish
reversal may be imminent. Traders often interpret this as a signal to consider buying or going
long on the asset.
💥 Bearish Divergence: This happens when the price of an asset forms a higher high, but the
RSI indicator forms a lower high. It indicates that the buying pressure is diminishing, and a
bearish reversal may be on the horizon. Traders often view this as a signal to consider selling
or going short on the asset.
🐸 RSI divergences are considered as potential reversal signals, but they should not be relied upon solely for making trading decisions. It is crucial to combine them with other technical analysis tools and indicators, as well as considering fundamental factors, to increase the probability of accurate predictions. Traders often use RSI divergences in conjunction with trendlines, support and resistance levels, and other momentum indicators to confirm their trading decisions.
💥 Divergences occur when the price of an asset moves in a different direction than the RSI
indicator, suggesting a potential shift in the underlying trend. There are two main types of
RSI divergences:
💥 Bullish Divergence: This occurs when the price of an asset forms a lower low, but the RSI
indicator forms a higher low. It suggests that the selling pressure is weakening, and a bullish
reversal may be imminent. Traders often interpret this as a signal to consider buying or going
long on the asset.
💥 Bearish Divergence: This happens when the price of an asset forms a higher high, but the
RSI indicator forms a lower high. It indicates that the buying pressure is diminishing, and a
bearish reversal may be on the horizon. Traders often view this as a signal to consider selling
or going short on the asset.
🐸 RSI divergences are considered as potential reversal signals, but they should not be relied upon solely for making trading decisions. It is crucial to combine them with other technical analysis tools and indicators, as well as considering fundamental factors, to increase the probability of accurate predictions. Traders often use RSI divergences in conjunction with trendlines, support and resistance levels, and other momentum indicators to confirm their trading decisions.