Example of RSI Divergence, you need to see this,
Let’s take a look at anexampleof RSI divergence in action. In the chart below, we have the daily price chart ofApple Inc. (AAPL)with the RSI indicator plotted below:
1) Example of Bearish RSI Divergence
Amidst the temporal expanse betwixt the months of July and September, a discerning gaze unveils the emergence of a phenomenon known as “bearish divergence” betwixt the price trajectory and the Relative Strength Index (RSI). Evidently, the price vector manifests an ascent characterized by successive pinnacles, while the RSI traverses a divergent trajectory, marked by diminishing zeniths. This juxtaposition intimates at a juncture where the erstwhile vigor of the uptrend may be waning, hinting at the latent inception of a prospective reversal in the southward direction. For practitioners well-versed in the stratagem of RSI divergence, a vista beckons wherein a short position within AAPL may be opportune. This strategic stance banks on the anticipation of an imminent downward reversal in AAPL’s price trajectory.
Should these strategists opt to effectuate a short position concomitant with the point of bearish divergence’s ascendancy, the annals of their trades would bear witness to a profitable narrative. This acumen would have culminated in a lucrative enterprise, for the days ensuing the divergence heralded a substantiated downward shift in AAPL’s valuation.
2)Example of Bullish RSI Divergence
Within the temporal embrace of March, a discerning eye is drawn to the emergence of a phenomenon termed “bullish divergence” betwixt the price trajectory and the Relative Strength Index (RSI). In this visual tableau, the price trajectory embarks upon a procession of nadirs, while the RSI embarks upon an ascendant trajectory marked by successive apogees. Evidently, this intricate interplay alludes to the imminent culmination of the prevailing downtrend, portending the advent of a prospective shift in fortune towards the realm of upswing. Practitioners well-versed in the sagacity of RSI divergence may discern a vista ripe for strategic engagement. The strategic stance espoused entails assuming a long position within AAPL, grounded in the sanguine prognosis of a forthcoming price reversal in an upward trajectory.
Should these seasoned strategists choose to assume their long position concomitant with the juncture of bullish divergence’s crystallization, the annals of their fiscal exploits would echo a narrative of prosperity. These astute maneuvers would have culminated in a triumphant foray, as the subsequent days bore testament to an unequivocal northward pivot in AAPL’s valuation.
Epilogue
The strategic doctrine of RSI divergence stands as a formidable instrument, endowed with the capacity to illumine the shadowy corridors of potential trend reversals and shifts in market momentum. By harnessing the prescience of the RSI indicator to unveil the tapestry of bullish or bearish divergence, those who navigate the financial ether can engage in a judicious deployment of strategic maneuvers. Such maneuvers entail assuming positions antithetical to the prevailing trend, thereby fostering the fertile grounds for the germination of profitable financial forays. Nevertheless, the discerning trader is enjoined to supplement the stratagem of RSI divergence with a bevy of complementary tools of technical analysis, thus conferring the sobriety of confirmation upon the divergent signals and heralding the dawning of a potential reversal.
I eagerly anticipate your musings on the subject of RSI Divergence. Should queries unfurl like tendrils within your mind’s domain concerning RSI Divergence, I am at your disposal for the purpose of facilitating elucidation. Please, do not hesitate to establish a connection.
Also READ: What are other indicators that you can use with RSI?
