When price and the RSI momentum indicator disagree — price makes a new extreme the RSI does not confirm.
The Relative Strength Index (RSI) measures momentum from 0-100. Bearish (regular) divergence is price making a higher high while RSI makes a lower high; bullish divergence is price making a lower low while RSI makes a higher low. The disagreement suggests weakening momentum.
Divergence warns that the current move is losing steam and may reverse or stall — bullish divergence hints at a bottom, bearish at a top.
Compare the peaks (or troughs) of price with the matching peaks/troughs on the RSI. If they slope in opposite directions, you have divergence.
Divergence can persist for a long time in a strong trend before anything happens — 'the market can stay irrational longer than you can stay solvent'. Use it as a warning, with confirmation, not a standalone entry.
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