The Relative Strength Index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes. An RSI divergence occurs when price moves in the opposite direction of the RSI. In other words, a chart might display a change in momentum before a corresponding change in price. During trends, the RSI readings may fall into a band or range. During an uptrend, the RSI tends to stay above 30 and should frequently hit 70. During a downtrend, it is rare to see the RSI exceed 70. In fact, the indicator frequently hits 30 or below. The RSI, used in conjunction with other technical indicators, can help traders make better-informed trading decisions. We use RSI, only correlated to Elliott Waves, to identify if there are divergence or not within or with other waves.
Some examples among others:
We identify with greater probability if we are in a Wave 3 (without divergence) a predictable Wave 5 (with divergence).
Corrective waves ABC , WXY must start with divergence but end up without divergence.
A Truncation, correction that usually ends with a Fibonacci extension between (0.618 and 0.764 and a possibility to identify is the absence of divergence.
Warning: All our services, breaking news, Signals, structures and analysis are focused solely for informational and educational purposes. Trading forex, stocks, futures, cryptos and others result in significant risk of loss and is not suitable for every investor and trader.