RSI Divergence Indicator

The Relative Strength Index (RSI) is a momentum indicator that measures the speed and change of price movements, typically ranging from 0 to 100. It helps identify overbought (above 70) and oversold (below 30) conditions in a market.

Bullish and Bearish Divergences:
Divergences occur when the RSI moves in the opposite direction of the price, signaling potential trend reversals.

Bullish Divergence (Reversal to the Upside)

Price makes a lower low, but
RSI makes a higher low
This suggests weakening selling pressure and a potential upward reversal.
Bearish Divergence (Reversal to the Downside)

Price makes a higher high, but
RSI makes a lower high
This indicates weakening buying pressure and a potential downward reversal.
Divergences are more reliable when combined with other indicators like support/resistance levels and volume analysis.