Detecting Regular and Hidden Divergences with RSI Swings
Summary
The indicator searches for RSI swing highs and lows, then compares each new swing with an earlier one alongside the corresponding price extreme. At highs, a higher price high paired with a lower RSI high is labeled a regular divergence; a lower price high paired with a higher RSI high is labeled hidden divergence. At lows, the comparisons are reversed. The chart marks detected cases with arrows and labels distinguishing the two types. RSI period, overbought and oversold thresholds, and the minimum spacing between candidate swings are configurable.
The author reports that, with matching settings, regular divergence marks align with those from the platform’s built-in indicator, while this version adds hidden divergence marks. This is a stated comparison, not a documented independent test: no symbols, sample period, signal outcomes, or profitability measures are supplied. The signals depend on swing identification and parameter choices, and the document gives no entry management, exit, or risk rules. Its mention of a future screener is not accompanied by one.
Key ideas
- The method identifies RSI local highs above an overbought threshold and local lows below an oversold threshold.
- It compares price extremes and RSI extremes across separated swings to classify divergence.
- Regular and hidden divergence signals are distinguished with arrow labels.
- RSI length, threshold levels, and minimum swing spacing affect detection.
- The reported comparison covers signal marks, not trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.