Indices Trading Divergence Example

Divergence trading has two setups and these are bullish & bearish divergence setups. For each of these indices trading setups there is also classic divergence and hidden divergence, these indices trading setups are explained below.

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 Divergence Example

RSI Indices Indicator Divergence Example

RSI Bullish Divergence Example

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 Examples

RSI classic bullish divergence setup 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 Examples

This divergence example set-up confirms that a retracement move is complete. This RSI divergence setup indicates underlying strength of an upward indices trend.

RSI Bearish Divergence Example

Hidden RSI Bearish Stock 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 set-up forms when there is a retracement in a downwards trend.

Indices Hidden Bearish Divergence - RSI Indices Divergence Examples

This divergence example 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 Examples

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.