Using RSI Divergence to Assess Reversals and Trend Continuations

Summary

The document explains RSI divergence as a mismatch between price movement and momentum measured by the Relative Strength Index. It distinguishes regular divergence, which can point to a possible reversal, from hidden divergence, which may support continuation of the prevailing trend. These patterns can be considered across different timeframes and markets.

It advises treating divergence as more useful when combined with other technical signals, higher-timeframe context, and risk management. The material provides conceptual guidance only: it includes no worked chart examples, rules for selecting swing points, backtest results, or estimates of signal reliability. Divergence should therefore be interpreted as a possible clue rather than a dependable forecast. The accompanying disclosure also emphasizes that crypto markets are unpredictable and that losses are possible, while noting that market protections and product regulation vary by location.

Key ideas

• RSI divergence occurs when price direction and RSI momentum move differently.
• Regular divergence may suggest a reversal, while hidden divergence may suggest trend continuation.
• Higher-timeframe context, other signals, and risk management can help assess divergence setups.
• The document supplies no performance evidence, and divergence is not a reliable forecast on its own.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.