The RSI failure swing is simply a more noteworthy version of a classic momentum divergence.
For those that don’t know, a momentum divergence is when price makes a new relative high or low, but with less oomph. Generally speaking, the RSI failure swing tells us the smart money is getting out while the dumb money is piling in. What this suggests is a trend reversal (if just only short term) could come next.
Arthur Hill over at StockCharts.com noted this key technical development in the oil and gas sector. Here’s a look at what he’s seeing.