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I recently noticed a triple divergence of the daily RSI (Relative Strength Index) on the S&P 500 chart. Whenever I see this pattern, it raises a red flag for me—it often signals a possible correction. Before diving in, please note that this post is purely for educational purposes and not financial advice.

Divergence Basics

The RSI is a momentum oscillator that helps identify overbought and oversold conditions in a market.

Divergence happens when RSI and price action move in opposite directions.

• Bearish Divergence: Price makes higher highs, but RSI makes lower highs → signals weakening momentum.
• Bullish Divergence: Price makes lower lows, but RSI makes higher lows → signals strengthening momentum.

What Is a Triple Divergence?

A triple divergence occurs when this mismatch between price and RSI happens three times in a row on the daily chart. This repetition highlights a stronger and more persistent contradiction between price action and momentum.

Bearish Triple Divergence Example:

• Price: Higher high → Higher high → Higher high
• RSI: Lower high → Lower high → Lower high

Suggests the uptrend is running out of steam and correction risk is rising.

Bullish Triple Divergence Example:

• Price: Lower low → Lower low → Lower low
• RSI: Higher low → Higher low → Higher low

Suggests sellers are losing control and a potential reversal upward may be coming.

Why Triple Divergence Matters

• Daily timeframe signals carry more weight than intraday divergences because they reflect broader market sentiment.
• A triple divergence is relatively rare compared to a single divergence.
• Traders often view it as a warning for a major reversal or at least a significant correction ahead.

Final Thoughts

While no technical pattern guarantees future outcomes, recognising signals like a triple divergence can help traders stay cautious and prepare for potential shifts in market momentum. Always combine these insights with broader market context and risk management practices.