RSI Divergence Explained Simply and Understandably. // Trading Strategy Indicator Bullish Bearish alert scalping screener scan MACD stochastic stochastics index moving averages day swing example examples basics david moadel
welcome to looking at the markets with David Modell today I wanted to give an
introduction to RSI divergences so let's talk about that a bearish divergence
means that the price action or candlesticks show higher highs but the
RSI shows lower highs and that might be a time to be cautious a bullish
divergence means that the price action or candlesticks show lower highs but the
RSI shows higher highs so the true direction might be found in the RSI and
this does not work 100% of the time you know I don't want you to count on any
indicator completely you need to do your own research and make your own decisions
but this is something you can use to help you alright so first I'm going to
show you some bearish divergences so this is Alta stock and all these charts
are from stockcharts.com and we see here in May and early June we see higher
highs in the candlesticks or the price action but at the same time we see lower
highs in the RSI and as we can see in this case the RSI really was correct
because afterwards the price went down considerably
here's another bearish divergence from Tesla stock and here in June we see
higher highs in the candlesticks or price action but at the same time we see
lower highs in the RSI and again at least in the short to medium term we see
that we see that the RSI was correct because the stock went down sharply
afterwards here's Lowe's stock and again we see
higher highs and and these are all daily charts by the way daily candlestick
charts we see higher highs in the candlesticks but at the same time lower
highs in the RSI and we can see what happened afterwards the stock went down
so the RSI was correct in this case it's not correct every time but this is
something to be aware of and here's Consolidated Edison and again higher
highs in the stock price action but lower highs at the same time in the RSI
all right Andy stock in the short-term did go down afterwards all right so
these are bearish divergence is I wanted to show at least one bullish divergence
and this is from silver miners sial and we see here in March the price
action we have lower highs but at the same time higher highs in the RSI and
the stock did go up afterwards alright so I just wanted to show an example of a
bullish divergence alright so that was my brief introduction to bullish
divergences and bearish divergences between the RSI and the candlesticks or
price action it does not work every time but sometimes oftentimes I would say the
RSI tells the true story but you want to use other indicators and at the end of
the day you want to make your own decisions not based just on one or two
indicators you have to make your own research and decisions I hope this was
helpful to you though so if you like this video please give it a thumbs up on
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