MACD Indices Classic Bullish and Bearish Divergence
MACD Indices Classic divergence is used as a possible sign for a indices trend reversal. MACD classic divergence is used when looking for an area where stock indices price could reverse and start going in the opposite indices trend direction. For this reason MACD classic divergence is used as a low risk entry method and also as an accurate way of exit out of a indices trade.
1. It is a low risk method to sell near the stock indices trading market tops or buy near the stock indices trading market bottom, this makes the risk on your stock indices trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Indices trade.
There are two types of Indices Classic Divergence:
- Indices Trading Classic Bullish Divergence
- Indices Trading Classic Bearish Divergence
Indices Classic Bullish Divergence in Indices Trading
Classic bullish divergence in indices trading occurs when stock indices price is making lower lows (LL), but the oscillator trading indicator is making higher lows (HL).
MACD Indices Classic Bullish Divergence in Indices Trading - MACD Divergence Strategy
Classic bullish divergence in indices trading 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 price lower was less as illustrated by the MACD indicator. This indicates underlying weakness of the downward stock indices trend.
Classic bearish divergence in Indices Trading
Classic bearish divergence in indices trading occurs when stock indices trading price is making a higher high (HH), but the oscillator technical indicator is lower high (LH).
MACD Indices Trading Classic Bearish Divergence in Indices Trading - MACD Divergence Strategy
Classic bearish divergence warns of a possible change in the stock indices trading market 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 price higher was less as illustrated by the MACD indicator. This indicates underlying weakness of the upward stock indices trend.
