The definition of bearish divergence: price higher high and RSI lower high

Divergence – Simple Oscillator Divergence

When the price and the RSI (or another momentum indicator) trend in the opposite direction. For example when a stock, commodity or currency creates a higher high but the indicator makes a lower high that is called “oscillator lower-top divergence” (see illustration) or often referred to as “bearish divergence”.

When the RSI forms a higher bottom and the price registers a lower bottom in a down trend, they diverge. It is known as “oscillator higher-low divergence” or “bullish divergence”.

The short names, bearish divergence and bullish divergence is a source of misunderstanding. Contrary to popular belief momentum divergences don’t indicate reversals. Or at least statistically they perform terribly bad as reversals. Instead they signal the deceleration of the trend. Therefore a great majority of divergences just leads to corrections in the existing and soon continuing trend.