Stock Indices Trading Divergence Definition
Divergence trading concept is a concept where a trader will for a difference between the stock indices price movement with the movement of a technical trading indicator. For our examples we shall use the RSI indicator to explain divergence trading.
RSI indicator is one of the oftenly used divergence technical indicator. This stock indices indicator is an oscillator similar to the RSI and it can be used to trade divergence setups just the same way as the RSI indicator.
RSI Indices Technical Analysis and RSI Trading Signals
RSI Divergence Indicator
RSI Bullish Indices Trading Divergence Setups
Classic RSI Bullish Stock Indices Trading Divergence Setup
RSI classic bullish divergence occurs when stock indices trading price is making lower lows (LL), but the RSI indicator is making higher lows (HL).
RSI Indices Divergence Definition
RSI classic bullish divergence warns of a possible change in the indices trend from down to up. This is because even though the stock indices price went lower the volume of sellers who pushed the stock indices trading price lower was less as illustrated and displayed by the RSI indicator. This is an technical indicator of the underlying weakness of the downwards trend.
Hidden RSI Bullish Indices Trading Divergence Setup
Forms when stock indices price is making a higher low (HL), but the RSI indicator is showing a lower low (LL).
RSI hidden bullish divergence occurs when there is a retracement in an upwards indices trend.
Indices Hidden Bullish Divergence - RSI Indices Divergence Definition
This set-up confirms that a retracement move is complete. This RSI divergence setup indicates underlying strength of an upward indices trend.
RSI Bearish Stock Indices Trading Divergence
Hidden RSI Bearish Indices Trading Divergence Setup
Forms when stock indices trading price is making a lower high (LH), but the oscillator trading indicator is showing a higher high (HH).
Hidden bearish divergence forms when there is a retracement in a downwards trend.
Indices Hidden Bearish Divergence - RSI Indices Divergence Definition
This set-up confirms that a retracement move is complete. This divergence indicates underlying strength of a downward indices trend.
RSI Classic bearish Stock Indices Trading Divergence Setup
RSI classic bearish divergence occurs when stock indices price is making a higher high (HH), but the RSI technical indicator is lower high (LH).
Indices Classic Bearish Divergence - RSI Indices Divergence Definition
RSI Classic bearish divergence warns of a possible change in indices trend from up to down. This is because even though the stock indices price went higher the volume of buyers that pushed the stock indices trading price higher was less as illustrated and shown by the RSI technical indicator. This is an technical indicator of the underlying weakness of the upwards trend.
