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# RSI divergences

![](/files/-Mi7_S_gGvL5PC2uF2nw)

THE RELATIVE STRENGTH INDEX (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100.

![](/files/-Mi7_YTKLUScCgXQwqjM)

## Alert when

* Bullish signal: The RSI forms two rising lows that correspond with two falling lows on the price
* Bearish signal: The RSI forms a series of two falling highs that correspond with two rising highs on the price

## Indicator config

* RSI length: 14

## TIPs for trading

![](/files/-Mi7aIKLdepcZiIgKGsc)

![](/files/-Mi7aMM8oyiNGT56BlYn)

A bullish divergence occurs when the RSI creates an oversold reading followed by a higher low that matches correspondingly lower lows in the price. This indicates rising bullish momentum, and a break above oversold territory could be used to trigger a new long position.

A bearish divergence occurs when the RSI creates an overbought reading followed by a lower high that matches corresponding higher highs on the price.

As you can see in the following chart, a bullish divergence was identified when the RSI formed higher lows as the price formed lower lows. This was a valid signal, but divergences can be rare when a stock is in a stable long-term trend. Using flexible oversold or overbought readings will help identify more potential signals.

## Tradingview Script

{% embed url="<https://www.tradingview.com/script/0TgfxuaU-YummyProfit-RSI-Divergence/>" %}