Bearish RSI divergence — price making a higher high while RSI makes a lower high — appears constantly on social feeds. Most instances occur nowhere near a meaningful level and resolve without reversal. The divergence we teach matters only when price tests a pre-graded resistance zone.
Three conditions we require
First, the level must be marked before the session, not drawn after divergence appears. Second, divergence must form across at least two swing highs within the level band. Third, the rejection candle should show range contraction or a upper wick proportionally larger than recent bars.
False positives in trends
Strong trends produce repeated bearish divergence while price climbs. Without a level cap, each divergence looks convincing in isolation. We treat these as continuation warnings, not shorts — unless a weekly supply zone sits overhead.
Pair with invalidation
Even valid divergence gets a written stop: above the divergence high plus a buffer tied to average range, not a fixed pip count. Targets aim for the next daily support. Skipping this step turns a structural read into a guess.