Bank Nifty, RSI and Nifty

Strong Negative Divergence- Bank Nifty with RSI & Nifty

This is one important development taking place since last few days.Bank Nifty is consistently showing negative divergence with RSI and Nifty. Divergence happens when Price move upwards but the oscillators ( like RSI) moves downwards. This shows even though the price is moving up the strength is missing  and such up moves are not to be trusted with.




Bank Nifty Divergence with RSI & Nifty

Here you can see bank nifty is consistently moving in upward trajectory while the RSI ( relative strength index is making lower high. Similarly even the Nifty is making lower highs. With so many negative divergences all around, this is the time to be careful off course divergences can continue for long and sometimes even reverses too. But this is not something one can ignore and should be definitely be part of your analysis while you are devising your trading strategy.

For a genuine bull run I would ideally like to see no divergences.