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Setups - Bearish RSI Divergence

Overview​

The Setups - Bearish RSI Divergence profile highlights short setups where price action and momentum have recently diverged in a bearish way. Only confirmed bearish RSI divergence signals from the last two trading sessions are included, helping keep the profile focused on timely reversal and breakdown candidates.

These results also require clean setup conditions, including strong risk/reward, a clearer downside path, and enough liquidity and volatility for the move to matter.

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This profile updates in real time and applies filters automatically to highlight short setups with confirmed bearish RSI divergence, favorable risk/reward, and a clearer path to the projected target. It can be used across all market sessions.

Strategy Focus​

  • Surface short setups with confirmed bearish RSI divergence from the last 1 to 2 trading days
  • Focus on names with favorable downside risk/reward and fewer barriers to support on the way to target
  • Identify reversal and breakdown candidates where momentum is weakening beneath price
  • Prioritize liquid, volatile stocks that can follow through once weakness starts to expand
  • Combine strategy metrics, divergence signals, and group context to refine short-side review
  • Build watchlists around timely bearish setups rather than older, already played-out divergence signals

Filters Applied​

This profile applies multiple layers of filters to keep the results focused on recent bearish reversal conditions:

  • Liquidity Rating > 70, ATRP 14D ≥ 0.5, Volatility (Month) ≥ 1: Ensures the stock is liquid and active enough for short setups to follow through cleanly.
  • AI - Alpha Strategy = Short: Requires MarketAlpha to detect a short-biased setup.
  • AI - Risk/Reward ≥ 2, AI - Path to Target ≤ 1: Keeps only setups with strong downside potential relative to risk and limited barriers between price and target.
  • Bear RSI Divergence Days = 1-2: Requires a confirmed bearish RSI divergence signal from the last two trading sessions.

These filters keep the profile centered on recent bearish divergence setups with cleaner downside structure.

Metrics Used​

Strategy Metrics​

  • AI - Alpha Strategy: Shows whether MarketAlpha currently identifies the setup as short-biased.
  • AI - Risk/Reward: Measures the projected downside relative to the stop.
  • AI - Path to Target: Counts how many key barriers remain between price and the projected downside target.

Momentum and Divergence Signals​

  • RSI Divergence 14 Days: Tracks bearish and bullish divergence, including hidden divergence, between price and the 14-day RSI. In this profile, it is used to confirm recent bearish divergence and its timing.
  • Universal Pattern Detection: Adds bearish pattern context that may reinforce the divergence signal.
  • Tight Range: Flags recent compression that can lead to sharper downside expansion once weakness confirms.

Price Action and Volume Context​

  • Change Pre Market (%): Shows whether weakness is already building before the regular session.
  • Change From Close (%): Tracks current weakness relative to the previous close.
  • Volume All Hours: Confirms full-session participation across pre-market, regular, and post-market trading.
  • Relative Volume: Helps show whether the breakdown is supported by stronger-than-normal activity.
  • Dollar Volume Rank: Keeps the most liquid and actively traded names near the top.

Group and Relative Strength Context​

  • Industry Rating 1 Day, Theme Rating 1 Day: Show whether short-term group behavior is also weak.
  • Industry Rating 1 Year, Theme Rating 1 Year: Add broader context around longer-term group leadership or weakness.
  • Relative Strength 1 Day, Relative Strength 1 Year: Help compare short-term and long-term underperformance.

Fundamentals and Timing​

  • MarketAlpha Rating: Composite view of overall technical and fundamental quality.
  • EPS Rating, Sales Rating, Profit Rating: Help show whether the bearish setup is also supported by weaker business performance.
  • Accumulation/Distribution Score: Tracks institutional flow, where lower readings can reinforce downside pressure.
  • 52 Week High (%): Shows how far the stock is from its yearly high, which helps frame downside room.
  • Next Earnings In Days: Adds timing context around possible event risk.

Default Sorting Logic​

Results are sorted by Dollar Volume Rank (ascending) to keep the most liquid and active bearish divergence setups at the top.

Practical Use Cases​

  • Find recent bearish RSI divergence setups before the move becomes obvious
  • Focus on short candidates with cleaner downside structure and stronger reward-to-risk
  • Monitor reversal setups where momentum is weakening beneath price
  • Build watchlists of liquid stocks showing fresh bearish divergence
  • Strengthen downside review with group weakness, volume confirmation, and strategy metrics
  • Use Multi-Charts to validate divergence, structure, and downside follow-through