Been backtesting RSI bearish divergence signals on EUR/USD and getting mixed results.
Sometimes it works perfectly, other times price keeps climbing despite the divergence. Wonder if I’m missing something with the timeframe or need additional confirmation indicators.
Divergence works way better when you combine it with support/resistance levels. I wait for price to actually hit a key level before I take the signal.
Works best in ranging markets not trending ones
RSI divergence burned me hard when I started trading. Here’s what I figured out - it shows momentum getting weak, not that price will reverse right away.
The game changer was waiting for multiple touches on both price and RSI. One divergence signal is garbage - you need at least two peaks forming the pattern.
Divergence works way better in sideways markets. During strong trends, price can stay divergent longer than your account can survive the pain.
Now I only trade bearish divergence on 4H or daily charts. The 15min and 1H timeframes are just noise machines.