RSI Divergence

RSI divergence in trading occurs when the price of an asset and its Relative Strength Index (RSI) indicator move in opposite directions. This divergence suggests a weakening of the current trend and a potential reversal. For example, if the price makes a new high, but the RSI makes a lower high, it could indicate bearish divergence and a potential price drop. Conversely, if the price makes a new low, but the RSI makes a higher low, it could indicate bullish divergence and a potential price increase.