💣 Do you know what RSI really is? 💣

RSI (Relative Strength Index) is a technical analysis indicator that measures the strength and speed of price movements of a financial instrument. The term RSI price divergence refers to the inconsistency between price movements and the RSI indicator. This situation can indicate the end of a trend or a potential reversal.

RSI price divergence can come in two main types:

Bullish Divergence: When prices are testing new lower levels while the RSI is forming a higher base at the same time, it's considered a bullish divergence. This suggests that the downward trend is weakening or could potentially reverse. Investors may look for a buying signal, believing that the likelihood of prices rising has increased.

Bearish Divergence: When prices are testing new higher levels while the RSI is forming a lower peak, it's considered a bearish divergence. This indicates that the upward trend is weakening or could potentially reverse. Investors may look for a selling signal, thinking that the likelihood of prices falling has increased.

RSI price divergences can be used to predict trend reversals, but they don't always provide precise signals. They should be evaluated in conjunction with other technical analysis tools and the overall context of price movements. Investors should gain experience in market analysis to recognize and interpret divergences effectively.