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RSI divergence: regular and hidden

When price and RSI disagree: spot the four types of divergence and tell reversal from continuation.

What divergence is

Divergence happens when price makes a new high or low but RSI does not confirm it. It shows that momentum is fading compared with price. Compare two consecutive highs (or lows) on price with the matching highs (lows) on RSI.

The four types

Regular bullishPrice: lower low. RSI: higher low → selling is drying up, a reversal up is possible.
Regular bearishPrice: higher high. RSI: lower high → buying is weakening, a reversal down is possible.
Hidden bullishPrice: higher low. RSI: lower low → a pullback inside an uptrend, the trend may continue.
Hidden bearishPrice: lower high. RSI: higher high → a bounce inside a downtrend, the trend may continue.

How to trade it

  1. Only pay attention to divergence at important levels: support/resistance, old highs or lows, H4 and above.
  2. Wait for confirmation: a clear reversal candle, a break of the short-term trendline, or RSI crossing back over 50.
  3. Put the stop beyond the high or low that formed the divergence.
  4. First target is the nearest opposite swing; move the stop to break-even at 1R.
TipHidden divergence is often more reliable than regular divergence because it trades with the main trend.
Watch outA strong trend can print two or three divergences in a row and still not turn. Never enter on divergence alone.

On TradingView

TradingView's built-in RSI Divergence Indicator can mark divergences for you, but draw them yourself first so you understand what you see.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.