Vladimir RibakovOwner, Chief Trader at Home Trader Club (Former Traders Academy Club), Owner, Chief Trader at Home Trader Club (Former Traders Academy Club) · Owner, Chief Trader at Home Trader Club (Former Traders Academy Club)

How To Spot a Bullish Divergence On RSI Indicator #trading #forex #tradingstrategy #fyp

24 Jun 2024 · 1 min

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In this instructional video, Vladimir Ribakov explains how to identify bullish divergence using the Relative Strength Index (RSI). He outlines a two‑step process: first, locate a clean bearish trend on the price chart, characterized by a series of lower highs and lower lows. Second, compare the recent price lows with the RSI lows, ensuring that at least one RSI low falls below the oversold zone (around 20‑25). Ribakov uses the default RSI settings, with extreme levels set at 80 (overbought) and 20 (oversold). He demonstrates the method with three examples – EUR/CAD on a 1‑hour chart, EUR/USD, and USD/JPY on a 4‑hour chart – each showing lower price lows paired with higher RSI lows, indicating that sellers are losing momentum and buyers may take control. The video emphasizes that bullish divergence signals a potential shift from bearish to bullish market sentiment.

Chapters

How to spot a bullish divergence on RSI. Step 1, find a clean bearish trend, sequence of lower highs, lower lows. Step 2, compare the recent lows on the chart with the recent lows on the RSI. Make sure at least one of the lows was below the level of 20 or at least 25 for oversold conditions. I use the default settings of RSI, just for extreme levels I use 80 and 20. Bullish divergence means sellers are losing their grip. Buyers could take control. Few examples: Euro CAD, 1-hour chart, bearish trend, lower lows on the chart, higher lows on the RSI. First low below the 20. Euro dollar, bearish trend, lower lows on the chart, higher lows on the RSI. Bullish divergence. Buyers are coming. Dollar yen, 4-hour chart, clean bearish trend, lower lows on the chart, higher lows on the other side. Guess who is coming to take the control? It buyers.