Indices Trading with Divergence on MetaTrader 4 MT5 PDF Free Download
Divergence Indices Trading Setup is one of the trade setups used by Indices traders. It involves looking at a stock indices chart & one more stock indices indicator. For our example we shall use the MACD indices indicator.
To spot this stock indices divergence trading setup find two chart points at which stock indices trading price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between stock indices trading price & momentum.
To look for divergence stock indices trading setup we look for 2 chart points, two highs that form an M-shape on the stock indices chart or two lows that form a W-Shape on the stock indices chart. Then look for same M-shape or W-Shape on the stock indices indicator you use to trade.
Example of a Indices Trading Divergence Trade Setup:
In the stock indices chart below we spot two chart points, point A and point B (swing highs). These 2 chart points form an M-shape on the stock indices trading price chart.
Then using MACD indicator we check highs made by MACD technical indicator, these are highs that are directly below Chart points A and B.
We then draw one line on the stock indices chart & another line on the MACD indices technical technical indicator.
Drawing Divergence Indices Trading Lines
The stock indices chart above shows example of one of the four types of stock indices trading divergence setups, the one stock indices divergence setup above is known as hidden bearish stock indices divergence trading setup, one of the best type to trade. Types of indices trading divergences are covered in the next learn indices guide lesson.
How to spot stock indices trading divergence setups
In order to spot Indices Trading divergence signal we look for the following:
- HH=Higher High- two highs but the last one is higher
- LH= Lower High- 2 highs but the last one is lower
- HL=Higher Low- 2 lows but the last one is higher
- LL= Lower Low- 2 lows but the last one is lower
First let us look at the illustrations of these stock indices divergence trading terms:
M-shapes dealing with Indices price Highs
W-Shapes dealing with Stock Indices price lows
Example of M Shapes on Indices Charts
Examples of W Shapes on Stock Indices Charts
Now that you have learned the stock indices divergence trading terms which are used to explain divergence indices trading set-up. Let us look at the 2 types of divergences and how to trade these stock indices chart setups.
There two types are:
- Classic Divergence Indices Trading Setups
- Hidden Divergence Indices Trading Setups
These 2 setups are described on following guides below
Classic Divergence Indices Trading Setup
Hidden Divergence Indices Trading Setup
Indices Trading with Divergence on MetaTrader 4 MT5 PDF Download - Indices Trading with Divergence on MetaTrader 4 MT5 Indices Trading Platform PDF Free Download - MetaTrader 4 Indices Trading Platform MT5 Divergence Indices Guide.
