Hidden Divergence

Feb 16

RSI hidden divergence is easier to identify than regular divergence. If you enter a trade based on regular divergence and hold for a few weeks, buying the dip becomes easier once the hidden divergence sets up. As we are currently in profit by about 400 pips, we are able to observe the current market flow on higher time frames without emotions. Hidden divergence occurs when the price is making higher highs and higher lows, while the RSI is making lower lows. In this example, I have drawn a white line on the RSI indicating the two swing lows I'm referring to, and on the price chart, I have marked the higher lows with white lines. Additionally, you will notice the MACD is printing smaller red candles and holding above its midline while picking up momentum. I can now rest easy knowing my trade will reach a new high by breaking the current market structure high of this week.