Readers who have been following my weekly outlook for a while, know that I often talk about RSI divergence. It is one of the tools in my trading toolbox. But what exactly is a divergence and how do you correctly identify it? How do you use the RSI indicator in reversal trading and how does it help you spot reversal setups?
I get a lot of questions about the details of how to use the RSI indicator in general and RSI divergence in specific, so let’s go over everything you need to know in order to use RSI divergences like a pro.
What is RSI?
Now, to understand RSI divergences, the first step is to know what the RSI indicator actually measures. Most of you will have seen it on your trading platform, but do you really understand what it does? Let’s have a look.