RSI divergence is when the price makes higher highs in an uptrend and the RSI indicator makes lower highs. Or in the other direction: when the price makes lower lows in a downtrend and the RSI indicator makes higher lows. Here’s an example to make it clear:
Here, we can see that the price is in an uptrend. In the beginning of the uptrend, the RSI indicator and the price are very similar; both are going up. At some point, however, the price will still make higher highs, but the RSI indicator is starting to go down and makes lower highs. That’s the divergence we’re looking for. In a downtrend, we see the exact opposite:
In this example, the price is in a downtrend. The price is making lower lows but all of a sudden cheap rolex, the RSI indicator shows us something: instead of making lower lows as well, we can see that the RSI indicator shows us higher lows. That’s RSI divergence.