Divergence occurs when the price of a currency pair and the RSI indicator move in opposite directions. Divergence is a powerful signal that the current trend may be weakening and a reversal could occur.

Types of RSI Divergence
1. Bullish Divergence
Occurs when price makes a lower low, but RSI makes a higher low.
Interpretation: Selling pressure is weakening, and the price may reverse upwards.
Traders often look for buying opportunities.

2. Bearish Divergence
Occurs when price makes a higher high, but RSI makes a lower high.
Interpretation: Buying momentum is weakening, and the price may reverse downwards.
Traders often look for selling opportunities.

Why Traders Use Divergence
Early Warning of Reversal – Divergence can signal trend exhaustion before price actually reverses.
Better Timing – Helps traders enter or exit trades more strategically than relying on price alone.
Works in Any Timeframe – Can be applied to short-term or long-term charts.

Tips for Trading Divergence
Always confirm divergence with support/resistance levels or trendlines.
Avoid trading divergence alone; it’s stronger when combined with other technical signals.
Be careful in strong trending markets, as RSI divergence may give false signals.