An RSI Divergence indicator shows traders when the Relative Strength Index (RSI) and the symbol price (action) is no longer show the same bullish or bearish momentum, the RSI will show the magnitude of the price movement over a particular timeframe. Many traders use the RSI indicator for trend trading as it is one of the most accurate and popular indicators in the market, the divergence variation looks at the relation to price action for more accurate signals.
How does it work?
Divergence is a signal that the current trend for the chart timeframe you are looking at has lost its momentum, this will show a possible signal to enter a trade in the opposite direction of the current trend. An RSI divergence shows that the indicator does not agree with the current price action. The chart screenshot above shows a bearish divergence and that a bearish trend is about to happen, which it does, but probably due to a market event.
The indicator settings can be found when you first attach the indicator to a chart, you can also edit these settings at any time by right-clicking the mouse on the indicator lines.
- Periods - number of historical period bars (candlesticks).
- Min distance (bar index) - the minimum number of bars between the start and endpoints of the divergence.
- Show On Chart - Show/hide the divergence lines on the chart.
- Show On Indicator - Show/hide the divergence lines on the indicator.
- Alert - popup, sound, and email alert whenever it finds a new setup.
How To Install & Open
First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install it onto the platform.
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