Master the 4 Types of Divergences: Your Quick Reference Sheet for RSI Trading

Want to level up your technical analysis game? Understanding divergences between price action and RSI indicators is a game-changer for spotting potential reversals and trend continuations. Here’s your complete divergences cheat sheet to decode what the charts are really telling you.

Regular Divergences - When Reversals Are Coming

Regular divergences signal that a reversal might be around the corner. These occur when price and RSI are moving in opposite directions.

Regular Bullish Divergence happens when price prints lower lows, but RSI creates higher lows. This pattern typically appears at the bottom of a downtrend and suggests a potential bounce to the upside is brewing.

Regular Bearish Divergence is the mirror image—price makes higher highs while RSI makes lower highs. Usually spotted after an uptrend, this pattern warns that a downside reversal could be imminent.

Hidden Divergences - Spotting Trend Continuations

Hidden divergences tell a different story: they suggest the current trend still has more fuel in the tank. These are your clues that momentum will persist after minor pullbacks.

Hidden Bullish Divergence occurs when price creates higher lows but RSI makes lower lows. Despite the dip, this pattern points to an uptrend that’s likely to resume its strength.

Hidden Bearish Divergence flips the script—price forms lower highs while RSI forms higher highs. This indicates a downtrend is preparing to push lower after a temporary relief bounce.

How to Use This Divergences Cheat Sheet in Your Trading

The beauty of this divergences cheat sheet lies in its simplicity: match your price patterns against RSI behavior. Regular divergences help you catch potential reversals when trends are exhausting. Hidden divergences keep you riding winners by confirming trend strength through pullbacks. Traders who master reading these signals gain a significant edge in timing their entries and exits more precisely.