Everyone who performs technical analysis has encountered RSI, but most people cannot give a precise answer to what negative divergence is. In fact, it is a very critical signal in chart reading and often a harbinger of price reversals.

RSI is essentially an indicator that measures the momentum of an asset's recent price movements. It moves between 0 and 100, with the 30 and 70 levels being the most important zones. But the true strength of RSI doesn't come from here; its real value lies in detecting divergences.

If you ask what negative divergence is, simply put: the price makes a higher high than the previous peak, but the RSI stays at a lower level at this new peak. In other words, while the price is rising, the momentum is weakening. This situation usually indicates that the price is about to enter a downtrend. From what I've seen, such divergences often appear at the beginning of trend reversals.

Of course, there is the opposite as well. In the case called positive divergence, the price hits a new low while the RSI remains higher. This can be a bullish signal. Once you understand what negative divergence is, positive divergence becomes very simple to grasp.

But remember: divergences alone are not sufficient. RSI has its limitations and can sometimes be misleading. Before making a genuine buy or sell decision, you need to confirm with other indicators. You should look at price patterns, volume data, and other technical indicators. Knowing what negative divergence is is important, but combining it with other analysis tools is even more crucial. Doing so will help you make much more reliable and informed decisions in the market.