Analysis

How to Use the RSI in TradingView: Settings and Divergence

RSI is probably the most misused indicator: treat 70 as a sell and 30 as a buy, and it works in a range but stops you out in a trend. The problem isn't the indicator — it's the usage.

The truth about 70/30

• Ranging: a pullback from above 70 or a bounce below 30 works as a filter for range highs and lows;
• Trending: in a strong trend RSI flatlines above 70 for a long time — here 70 isn't a sell, it's evidence of trend strength. See flatlining and think "very strong," not "due to reverse."

Divergence in three steps

1. Price makes a new high (or low); mark the two points;
2. Read RSI at those points: new price high with a lower RSI high = bearish divergence, and vice versa;
3. Wait for confirmation: divergence is only a momentum-fading warning; it must be followed by structure breaking (e.g. a break of the prior low). It can flatline three or four times — buying the dip on it directly is a common way to lose.