Relative Strength Index (RSI)
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
Identifying Market Turning Points with RSI
The Relative Strength Index (RSI) is a widely used momentum oscillator. While many traders focus on simple overbought (above 70) and oversold (below 30) levels, analyzing RSI divergence offers deeper insight into potential trend reversals. Technical analysts at SP RESEARCHVIA PVT. LTD. explain how to trade these setups.
What is RSI divergence and how is it used in trading?
RSI divergence occurs when the price of a stock moves in the opposite direction of the RSI indicator. For example, if a stock price makes a new high but the RSI makes a lower high, it suggests weakening upward momentum and a possible reversal.
Classic vs. Hidden Divergence
Classic divergence signals a potential trend reversal, while hidden divergence points to trend continuation. Recognizing both patterns helps swing traders align their positions with the market's underlying momentum.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
Statutory Warning & Risk Disclaimer: Investment in securities market is subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Content provided on this blog is for informational and educational purposes only.