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📉 Your Ultimate Guide to RSI Divergence (Settings & Tips) 📈

Education
OANDA:EURUSD   Euro / U.S. Dollar

Hey traders,
Relative strength index is a classic technical indicator.
It is frequently applied to spot a market reversal.
RSI divergence is considered to be a quite reliable signal of a coming trend violation and change.

Though newbie traders think that the application of the divergence is quite complicated, in practice, you can easily identify it with the following tips:

💠First of all, let's start with the settings.
For the input, we will take 7/close.
For the levels, we will take 80/20.

Then about the preconditions:
1️⃣ Firstly, the market must trade in a trend ( bullish or bearish )
with a sequence of lower lows / lower highs ( bearish trend ) or higher highs / higher lows ( bullish trend ).

2️⃣ Secondly, RSI must reach the overbought/oversold condition (80/20 levels) with one of the higher highs/higher lows.

3️⃣ Thirdly, with a consequent market higher high / lower low, RSI must show the lower high / higher low instead.

➡️ Once all these conditions are met, you spotted RSI Divergence.
A strong counter-trend movement will be expected.

Also, I should say something about a time frame selection.
Personally, I prefer to apply it on a daily time frame, however, I know that scalpers apply divergence on intraday time frames as well.

❗️Remember, that it is preferable to trade the divergence in a combination with some price action pattern or some other reversal signal.

❤️Please, support this idea with a like and comment!❤️

Comments

Do you apply RSI indicator in trading?
+9 Reply
in what time frame and for what kind of trade ? intraday / short term/ long-term?
+6 Reply
Hi dear everyday you put new signal for forex
+3 Reply
Would you take the RSI(7) settings also for the 1H-Chart ? I am still a beginner and I don´t know the right indicators for the 1H-Chart.........Thanks a lot !
+3 Reply
@Schneeleopard I use the 6 and 14 on 1 hr
+1 Reply
Schneeleopard Alpha_Nerd1
@Alpha_Nerd1, Thank you very much !
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how
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