RSI Divergence Flags Potential Trend Exhaustion Signals

Momentum readings on the Relative Strength Index are increasingly diverging from price action across major pairs and indices, a classic early warning that trend exhaustion may be near. When price prints a higher high but RSI fails to confirm with its own higher high, traders treat this as a bearish divergence worth monitoring for reversal confirmation.

The inverse pattern — lower price lows paired with rising RSI troughs — often precedes short-term bottoms, especially when the oscillator is exiting oversold territory below 30. Divergence alone isn't a trigger; disciplined traders wait for a break of trendline structure or a candlestick confirmation before acting.

Combining RSI divergence with volume analysis adds conviction, filtering out false signals that plague low-liquidity sessions.