Master the Divergence Cheat Sheet: Quick Guide to RSI & Price Patterns

gas_fee_therapist · 2026-03-25T10:17:58+00:00

This essay discusses how to identify potential market reversals and continuations using divergence between price action and RSI. It outlines two types: regular divergence, indicating reversals, and hidden divergence, suggesting trend continuity. A cheat sheet summarizes key patterns for practical trading strategies.

gas_fee_therapist

2026-03-25 10:17:58

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Trading on hunches alone? Here’s a smarter way to spot potential reversals and trend continuations using a proven divergence cheat sheet. By comparing price action with RSI movements, you can identify high-probability trade setups before they fully develop. Let’s walk through this powerful visual reference that traders use daily.

The Two Main Types: Regular vs Hidden Divergence

Every divergence falls into one of two categories. Regular divergence signals that a reversal might be coming—the trend is weakening. Hidden divergence tells a different story: the existing trend will likely continue despite a temporary pullback. Understanding which type you’re facing changes your entire strategy.

Spotting Regular Divergence - Reversal Signals

Regular bullish divergence appears when price makes lower lows but RSI prints higher lows. This mismatch suggests buyers are stepping in even as prices drop—a classic reversal setup pointing toward an upside move after downtrends.

Regular bearish divergence works the opposite way: price reaches higher highs while RSI reaches lower highs. This divergence warns that upward momentum is fading, setting the stage for a potential downside reversal.

Hidden Divergence - When Trends Continue

Hidden bullish divergence shows price making higher lows alongside RSI making lower lows. Rather than reversing, this pattern suggests the uptrend has legs and will push higher after shaking out weak holders during the pullback.

Hidden bearish divergence mirrors this: price creates lower highs while RSI creates higher highs. Downtrends typically persist after this setup, as sellers maintain control even when short-term bounces occur.

Quick Reference: Divergence Patterns at a Glance

Divergence Type	Price Action	RSI Signal	What It Means
Regular Bullish	Lower Lows	Higher Lows	Upside Reversal Likely
Regular Bearish	Higher Highs	Lower Highs	Downside Reversal Likely
Hidden Bullish	Higher Lows	Lower Lows	Uptrend Continues
Hidden Bearish	Lower Highs	Higher Highs	Downtrend Continues

This divergence cheat sheet cuts through the noise. Pair these patterns with support/resistance levels and volume confirmation for even stronger setups. Master these four divergence types, and you’ve got a reliable framework for reading market sentiment before price reverses or accelerates.

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