I saw a headline this morning that made me laugh. The Pope is telling priests to stop using AI to write their sermons and to get back to 'real life'. Turns out, that's the best trading advice I've heard in months. The whole world is scrambling to find the perfect AI trading bot, the magic algorithm that prints money. They're looking for a shortcut. I know, because I looked for it too when I started. Blew up two accounts before I realized the truth.

The market isn't a math problem. It's a psychological battlefield. And your brain, your discretion, your ability to read the flow of the chart—that’s your edge. Price is all you need. Everything else is just noise. So let's talk about a setup that requires a human eye, a setup that has saved my skin and made me consistent money since I quit my marketing job in 2019: the classic RSI divergence strategy.

Every new trader makes the same mistake. They load up their chart with ten different indicators, looking for a perfect confluence of green lights to go long. They think trading is about finding a system that's right 100% of the time. It's not. It's about managing risk and exploiting high-probability setups. An AI bot can follow rules, sure. But it can't feel the mood of the market. It can't tell when a breakout is a low-volume trap or when a dump is a classic stop hunt before a massive rip.

Indicators are tools, not traffic lights. They are rearview mirrors. They tell you what *has* happened, not what *will* happen. The key is to use them to find discrepancies between what the indicator is saying and what price is actually doing. It's in that gap where the best trades live. It's a bit like how Alex Volkov looks for confluence in his cycle analysis; I look for divergence between price and momentum.

Divergence is simple. It's when price and your momentum indicator (I use the standard RSI 14-period) are telling you two different stories. It’s a sign that the current trend is running out of gas.

Bearish Divergence: Price makes a higher high, but the RSI makes a lower high. This is a warning that the buying pressure is weakening, even as price ticks up. It’s a classic bull trap.

Bullish Divergence: Price makes a lower low, but the RSI makes a higher low. This tells you that even though price is dropping, the selling momentum is fading. The bears are getting tired.

This is the most important part. A divergence is NOT a trade signal. It's a heads-up. It's the market whispering, 'Hey, pay attention.' I don't enter a trade until price action confirms what the divergence is hinting at. My confirmation checklist is simple:

• A break of a key trendline on the timeframe I'm watching.
• A clear candlestick pattern like a bearish/bullish engulfing or a pin bar at a key level.
• An increase in volume on the confirmation candle. Volume confirms conviction.

For example, look at Bitcoin (BTC) on the 4H chart. It ripped up to nearly $69,000. Let's say it prints a new high at $68,800, but the RSI(14) is clearly lower than it was at the previous peak around $67,200. That's a bearish divergence. I'm not shorting yet. I'm waiting. I draw a small ascending trendline connecting the recent lows. Once price breaks and closes below that trendline, say at $67,900, with volume—that's my entry. Stop goes right above the high at $69,100. My target is the next major level of support. This is classic support and resistance trading.

I've made all these mistakes myself. Sometimes I still do, especially when I get tilted and start revenge trading. It's my biggest weakness. I see someone like Sarah Chen digging into earnings reports and it reminds me to step back and not get lost in the 1-minute chart drama. The biggest mistakes with this setup are:

1. Jumping the gun. You see the divergence and immediately hit the button. You get run over because the trend has one more push left in it.
2. Ignoring the macro trend. Trying to short a bullish divergence in a screaming bull market is a recipe for disaster. This setup works best for calling local tops and bottoms, not major trend reversals.
3. Not having a clear invalidation. You need to know exactly where your stop loss is *before* you enter. If the trade goes against you, you get out. No questions asked.

Your job isn't to be right; it's to make money. And you make money by having an edge and applying it consistently. So here's your homework. Pull up a 4H chart of any asset you trade. Go back and find the last three major swing highs or lows. Can you spot an RSI divergence leading into them? Just watch. Train your eyes. Build the screen time.

An AI can backtest a million strategies in a second. But it can't sit there, watch the candles form, and feel the momentum shift. Not yet, anyway. So, are we trading in a golden era of human discretion, or are we just dinosaurs waiting for a smarter AI to take our lunch?