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RSI Divergence Detection

MarketAlpha automatically detects bullish and bearish divergences using the 14-day Relative Strength Index (RSI). These divergences can signal early signs of trend exhaustion, reversals, or hidden continuation patterns — and are visible directly on Alpha Charts and in screener tables.

This page explains how RSI divergences are calculated, categorized, visualized, and interpreted in both chart overlays and screener metrics.

RSI Basics​

The 14-day RSI is a momentum oscillator that tracks the speed and magnitude of recent price changes. It fluctuates between 0 and 100 and is used to identify potential overbought or oversold conditions.

  • Above 70 → Overbought (price may be extended to the upside)
  • Below 30 → Oversold (price may be extended to the downside)
  • Crosses through 70/30 often signal a momentum shift

Divergence Types Detected​

MarketAlpha detects four types of RSI divergence:

Normal Divergence​

  • Bullish Divergence: Price makes lower lows, RSI makes higher lows
  • Bearish Divergence: Price makes higher highs, RSI makes lower highs

Hidden Divergence​

  • Hidden Bullish Divergence: Price makes higher lows, RSI makes lower lows
  • Hidden Bearish Divergence: Price makes lower highs, RSI makes higher highs

These are automatically drawn by MarketAlpha’s AI based on price and RSI pivot alignment. The AI evaluates billions of potential lines and shows only the most structurally relevant ones.

Confirmed vs Unconfirmed Divergences​

Divergences are classified in two states:

  • Unconfirmed: Detected on the current day and needs 1 daily bar to confirm
  • Confirmed: Occurred at least one full trading day ago and remains valid if not invalidated

Since RSI divergence is a lagging-but-predictive signal, confirmation helps filter false positives and validate setups for screening or trade planning.

Divergence on Alpha Charts​

RSI divergences are drawn directly on Alpha Charts as labeled lines connecting pivot points on both price and RSI.

  • Confirmed and unconfirmed divergences are distinguished visually
  • Lines are directional and anchored to structural highs/lows
  • Helps identify where price momentum diverges from strength

RSI Divergence Metrics in the Screener​

MarketAlpha also provides a screenable metric: RSI Divergence 14 Days (RSI DVG).

This metric includes:

  • 0 → Unconfirmed divergence (detected as of the last close)
  • 1+ → Confirmed divergence (number = days since confirmation)
  • P → Bullish divergence
  • N → Bearish divergence

You can screen for:

  • Tickers with confirmed bullish or bearish divergence
  • Setups with divergence confirmed 1–3 days ago
  • Newly forming divergences (0 days = unconfirmed)

This lets you time setups based on how fresh the divergence signal is and align with your trading style (e.g. reversal anticipation vs confirmation).

Why It Matters​

RSI divergence is one of the most trusted momentum indicators used to:

  • Catch trend exhaustion
  • Anticipate reversals
  • Validate price structure with momentum
  • Identify hidden continuation opportunities

MarketAlpha automates the detection, confirmation, and screening process — giving you accurate, high-quality divergence logic without manual analysis.

RSI Divergence Detection provides a structured way to interpret momentum vs price — visible on every Alpha Chart, and ready to filter across the entire market with confidence.