A divergence is formed when the price and an indicateur, here the RSI, give contradictory information. It can be interpreted as a bearish or bullish pressure, by observing a loss of momentum during or at the end of a trend.
• Bullish divergence: lower in price, higher lows for the RSI. The bearish pressure isn’t supported, bullish signal.
• Bearish divergence: higher in price, lower highs for the RSI. The bullish pression isn’t supported, bearish signal.
• Hidden Bullish divergence: higher lows in price, lower lows for the RSI. Gives a bullish signal.
• Hidden bearish divergence: The RSI has higher highs but not the price. Gives a bearish signal.
The RSI divergence is used by active traders. It often offers clear and effective signals, enabling more security, even if divergences can accumulate before really getting active.