Forex & Stocks “RSI Hidden Divergence” Trading Strategy

We can understand it by understanding the difference between the regular and hidden divergence. Regular divergence is a trend reversal signal whereas hidden divergence is a trend continuation signal.

Points to remember:

• Hidden Bullish Divergence
  • During an uptrend.
  • Once price makes a higher Low, but oscillator makes a lower Low.
  • The trend should continue to the upside.
• Hidden Bearish Divergence
  • During a downtrend.
  • Once price makes a lower high, but oscillator makes higher high
  • The trend should continue to the downside.

In my opinion, RSI Hidden Divergence is the best RSI trading strategy because it has the highest success rate. Although its trading signals don’t appear frequently, they are highly accurate. So, it’s crucial for all traders to master this analysis technique.

In this strategy we use 30-period SMA and 10-period SMA and 9-period RSI. The moving average is the directional filter. When the price is above the Moving Average, the trader only looks for potential buy trades. The RSI is our trade signal.

• Download “ForexWOT-SMARSI(HiddenDivergence)” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-SMARSI(HiddenDivergence).tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-SMARSI(HiddenDivergence)” trading system and strategy.
• You will see the “ForexWOT-SMARSI(HiddenDivergence)” is available on your Chart.

From chart above, we can conclude that:

• 1st. Trend. There is a clear structure of price trending, 30-period SMA and 10-period SMA are sloping up.
• 2nd. Sign. RSI Hidden Bullish Divergence is just a sign for taking a long position.
• 3rd. Trigger. Start buying when RSI upward and above the 50 level. This serves better Win Rate.
• 4th. Stop Loss. Most recent low on the price.
• 5th. Risk. Don’t risk more than 1% till you master this strategy.

From chart above, we can conclude that:

• 1st. Trend. There is a clear structure of price trending, 30-period SMA and 10-period SMA are sloping down.
• 2nd. Sign. RSI Hidden Bearish Divergence is just a sign for taking a short position.
• 3rd. Trigger. Start selling when RSI downward and below the 50 level. This serves better Win Rate.
• 4th. Stop Loss. Most recent high on the price.
• 5th. Risk. Don’t risk more than 1% till you master this strategy.

In my opinion, RSI Hidden Divergence is the best RSI trading strategy because it has the highest success rate. Although its trading signals don’t appear frequently, they are highly accurate. So, it’s crucial for all traders to master this analysis technique.