Vladimir Ribakov shows how to spot bearish divergence on RSI: when price makes higher highs but RSI makes lower highs during an uptrend, buyers are weakening and a reversal is likely. He walks through three examples on GBP/CHF, EUR/AUD, and EUR/USD.
How to spot a bearish divergence on the RSI indicator. Step 1, find clean bullish trend. Bullish trend means sequence of higher highs, higher lows. Step 2, compare the recent highs on the chart with the recent highs on the RSI. Higher highs on the chart, lower highs on RSI. Bearish divergence means buyers are running out of steam. Reversal is very likely to happen. Few examples: pound franc daily chart, higher highs on the chart, lower highs on the RSI, while the first high overbought above 80. Euro Aussie 4-hour chart, first high on the RSI above 80, overbought, higher highs on the chart, lower highs on RSI, sellers are coming in. Euro dollar 4-hour chart, absolutely same, higher highs on the chart, lower highs on the RSI, sellers are coming in.
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