> ## Documentation Index
> Fetch the complete documentation index at: https://terminal.incrypto.ru/llms.txt
> Use this file to discover all available pages before exploring further.

# RSI Divergence

> Detects bullish and bearish divergences between price and RSI.

# RSI Divergence

The RSI Divergence indicator **automatically detects and marks divergences** between price action and the Relative Strength Index. A divergence occurs when price makes a new high or low, but RSI fails to confirm it — a classic early warning of momentum exhaustion and potential trend reversal.

## How It Works

The indicator runs in real-time and performs three steps:

### 1. Fractal Detection

First, it identifies **swing highs and swing lows** on both the price chart and the RSI using a fractal algorithm. A fractal is confirmed when a bar's high (or low) is the highest (or lowest) within `fractalSpan` bars on each side.

For example, with `fractalSpan: 3`, a swing high requires the bar's high to be greater than the highs of the 3 bars before and 3 bars after it.

### 2. Pivot Pairing

Next, the indicator looks for pairs of swing points that satisfy the divergence criteria within the `lookback` window:

**Bearish Divergence (Regular):**

* Price makes a **higher high** (second swing high is above the first).
* RSI makes a **lower high** (RSI at the second swing is below RSI at the first).
* Interpretation: Price is rising, but momentum is weakening. Sellers may soon overwhelm buyers.

**Bullish Divergence (Regular):**

* Price makes a **lower low** (second swing low is below the first).
* RSI makes a **higher low** (RSI at the second swing is above RSI at the first).
* Interpretation: Price is falling, but selling momentum is decreasing. Buyers may soon step in.

### 3. Visual Marking

Confirmed divergences are displayed as:

* **Colored dots** at the divergence point on the price chart.
* **Connecting lines** between the two swing points (optional, controlled by `showLines`).
* The RSI subchart also shows the RSI values at the divergence points.

### Indicator Type

**Overlay + Subchart** — Divergence markers appear on the price chart (dots and lines), and the RSI with its divergence lines appears in a subchart below.

## Settings

| Parameter        | Type    | Default   | Description                                                                                                                        |
| ---------------- | ------- | --------- | ---------------------------------------------------------------------------------------------------------------------------------- |
| `lookback`       | number  | 120       | Maximum number of bars to search back for divergence pivot pairs. Higher values find more divergences but may identify stale ones. |
| `fractalSpan`    | number  | 3         | Number of bars on each side required to confirm a swing high/low. Higher values produce fewer but more significant pivots.         |
| `minBarsBetween` | number  | 4         | Minimum number of bars between the two pivots forming a divergence. Prevents detecting noise-level divergences on adjacent bars.   |
| `dotSize`        | number  | 8         | Diameter (in pixels) of the divergence marker dot on the price chart.                                                              |
| `showLines`      | boolean | `true`    | Draw connecting lines between the two pivot points that form the divergence.                                                       |
| `bullishColor`   | color   | `#84cc16` | Color for bullish divergence markers and lines.                                                                                    |
| `bearishColor`   | color   | `#ef4444` | Color for bearish divergence markers and lines.                                                                                    |

### Parameter Tuning Guide

| Parameter        | Lower Value                               | Higher Value                                         |
| ---------------- | ----------------------------------------- | ---------------------------------------------------- |
| `lookback`       | Fewer divergences, only recent ones       | More divergences, including older setups             |
| `fractalSpan`    | More swing points detected, noisier       | Fewer swing points, only major swings                |
| `minBarsBetween` | Allows tighter divergences (more signals) | Requires wider divergences (fewer, stronger signals) |

<Tip>
  The default settings are balanced for most timeframes. If you see too many divergences on lower timeframes (1m–5m), increase `fractalSpan` to 5 and `minBarsBetween` to 8 to filter out noise.
</Tip>

## Types of Divergence

### Regular Divergence (Trend Reversal)

Regular divergences signal potential trend reversals:

| Type                | Price       | RSI        | Signal                                     |
| ------------------- | ----------- | ---------- | ------------------------------------------ |
| **Bearish regular** | Higher high | Lower high | Uptrend weakening, potential reversal down |
| **Bullish regular** | Lower low   | Higher low | Downtrend weakening, potential reversal up |

Regular divergences are the primary signals this indicator detects.

### Hidden Divergence (Trend Continuation)

Hidden divergences signal potential trend continuation:

| Type               | Price      | RSI         | Signal                       |
| ------------------ | ---------- | ----------- | ---------------------------- |
| **Bearish hidden** | Lower high | Higher high | Downtrend likely to continue |
| **Bullish hidden** | Higher low | Lower low   | Uptrend likely to continue   |

Hidden divergences are less commonly traded but can be powerful in trending markets. They indicate that the prevailing trend still has strength despite a temporary momentum shift.

## Interpretation

### Divergence Strength

Not all divergences are equal. Factors that increase reliability:

1. **Location**: Divergences at key levels (support, resistance, VWAP, VA boundaries) are far more significant than those in open space.
2. **Timeframe**: A divergence on the 4-hour or daily chart carries more weight than one on the 5-minute chart.
3. **Angle**: The steeper the divergence (larger difference between price and RSI slopes), the stronger the signal.
4. **RSI zone**: Bearish divergences with RSI in overbought territory (above 70) and bullish divergences with RSI in oversold territory (below 30) are highest probability.
5. **Number of touches**: A "triple divergence" (three successive higher highs with RSI making lower highs each time) is stronger than a simple two-point divergence.

### Trading Divergences

A systematic approach to trading RSI divergences:

1. **Identify the divergence**: The indicator marks it automatically.
2. **Confirm the context**: Is the divergence at a meaningful level (S/R, VWAP, previous day high/low)?
3. **Wait for trigger**: Do not enter immediately on the divergence. Wait for price to confirm the reversal — a break of a local trendline, a strong rejection candle, or a close back inside a key level.
4. **Set stops**: Place stops beyond the extreme of the divergence (the second swing point).
5. **Target the mean**: First target is often the SMA(20) or VWAP — the "mean" of the recent move.

<Tip>
  Divergences are most reliable at key structural levels — support, resistance, value area boundaries, or previous session highs and lows. A divergence in open space with no structural confluence has a much lower success rate.
</Tip>

### Common False Signals

Divergences can fail, especially in:

* **Strong trends**: In a powerful rally, you may see bearish divergence after bearish divergence as price continues higher. Each one "fails" until the trend finally turns.
* **Low-volume periods**: Weekend crypto trading or Asian session lulls can produce meaningless small swings that register as divergences.
* **Very short timeframes**: On 1-minute charts, the noise-to-signal ratio is high. Divergences are most reliable on 15-minute and higher timeframes.

## Alerts

RSI Divergence supports the following **alert rule**:

| Alert Event      | Description                                                   |
| ---------------- | ------------------------------------------------------------- |
| `new_divergence` | A new bullish or bearish divergence is detected and confirmed |

The alert fires once per divergence when the second pivot point is confirmed (after `fractalSpan` bars have passed to validate the swing).

## Combining with Other Indicators

| Companion           | Enhanced Signal                                                                              |
| ------------------- | -------------------------------------------------------------------------------------------- |
| **VWAP**            | Bullish divergence + price at VWAP = institutional buying zone                               |
| **Session Levels**  | Divergence at previous day high/low = structural confluence                                  |
| **Volume Bars**     | Divergence + declining volume on second leg = momentum truly fading                          |
| **Bollinger Bands** | Divergence at outer band = double mean-reversion signal                                      |
| **Delta**           | Bearish divergence + negative delta on second high = aggressive selling despite higher price |

## Practical Considerations

* **Repainting**: The indicator requires `fractalSpan` bars after the pivot to confirm the swing point. This means the divergence marker appears `fractalSpan` bars after the actual pivot, not in real-time. This is by design — it prevents false signals from unconfirmed swings.
* **Lookback scope**: Very large `lookback` values (200+) can identify divergences where the two pivots are far apart. While technically valid, widely-separated divergences are less actionable because the market conditions may have fundamentally changed between the two points.
* **Multiple divergences**: It is common to see 2–3 divergences form before a trend actually reverses. The first divergence is an early warning; the second or third, especially with a trigger confirmation, is often the tradeable one.

## Related Indicators

* [RSI](/en/indicators/classic/rsi) — The underlying oscillator; understanding RSI mechanics helps interpret divergences
* [MACD](/en/indicators/classic/macd) — MACD divergences provide similar signals from a different mathematical basis
* [Bollinger Bands](/en/indicators/classic/bollinger-bands) — Volatility context for divergence trades