RSI Divergence Scanner [Chart Whispers]
Divergence occurs when the price of an asset moves in the opposite direction of a technical indicator, like an oscillator, or moves counter to other data. Divergence signals that the current price trend may be losing momentum and could potentially reverse.
Typically, if a stock is rising and making new highs, you want to see the RSI also reaching new highs. However, if the stock makes new highs but the RSI starts making lower highs, this indicates the uptrend may be weakening - a sign of negative divergence.
Positive divergence is the opposite situation. If a stock is making new lows but the RSI starts making higher lows with each swing, investors may conclude the stock's downward momentum is slowing and a trend reversal could follow soon.
Divergence is one of the main uses of many technical indicators, especially oscillators. It can act as an early warning for potential trend changes. However, divergence signals should be used cautiously - they indicate a weakening trend but don't guarantee a reversal. Traders should combine divergence with other signals before acting.
Typically, if a stock is rising and making new highs, you want to see the RSI also reaching new highs. However, if the stock makes new highs but the RSI starts making lower highs, this indicates the uptrend may be weakening - a sign of negative divergence.
Positive divergence is the opposite situation. If a stock is making new lows but the RSI starts making higher lows with each swing, investors may conclude the stock's downward momentum is slowing and a trend reversal could follow soon.
Divergence is one of the main uses of many technical indicators, especially oscillators. It can act as an early warning for potential trend changes. However, divergence signals should be used cautiously - they indicate a weakening trend but don't guarantee a reversal. Traders should combine divergence with other signals before acting.