RSI Stock Index Classic Bullish Divergence & Classic Bearish Divergence Trading Setups
Stock Index classic divergence is used as a possible sign for a Indices trend reversal. Classic Indices divergence setup is used when looking for an area where Indices price could reverse & begin going in the opposite direction. For this reason forex classic divergence is used as a low risk entry method & also as an accurate way of exit out of a Indices trade.
- Classic Indices divergence is a low risk method to sell near the top or buy near the bottom of a Indices market trend, this makes the risk on your Stock Indices trades are very small relative to the potential reward.
- Classic Indices divergence is used to predict the optimum point at which to exit a Indices trade
There are two types of RSI Classic Indices divergence trading setups:
- Classic Bullish Divergence Setup
- Classic Bearish Divergence Setup
Classic Indices Bullish Divergence
Classic Indices bullish divergence occurs when price is making lower lows (LL), but the oscillator is making higher lows (HL).
Classic Indices Bullish Divergence - RSI Stock Index Trade Strategies
Classic bullish Stock Indices divergence warns of a possible change in the Indices market trend from down to up. This is because even though the Indices price went lower the volume of sellers that pushed the price lower was less as illustrated by the RSI Stock Index indicator. This indicates underlying weakness of the downwards Indices trend.
Classic Indices Bearish Divergence
Classic Indices bearish divergence occurs when price is making a higher high (HH), but the oscillator is lower high (LH).
Classic Bearish Divergence Trading with RSI Trading Indicator Stock Indices Strategies
Classic Indices bearish divergence warns of a possible change in the Indices trend from up to down. This is because even though the price went higher the volume of buyers that pushed the price higher was less as illustrated by the RSI Stock Index indicator. This indicates underlying weakness of the upwards Indices trend.
