What's Stochastic Indices Divergence?
Stochastic Divergence Indices Trading is one of the indices trading strategy used by online stock indices traders to analyze indices chart stock indices price movement. Stochastic Indices Divergence involves looking at a stock indices chart & one more stock indices technical indicator - Stochastic indicator. For our this stock indices trading divergence tutorials we shall use the Stochastic indicator - Stochastic Stock Indices Divergence.
To spot this Stochastic indices divergence setup find 2 chart points at which stock indices price makes a new swing high or a new swing low but the Stochastic indicator does not do the same, thus indicating that there is a divergence between the stock indices price and momentum.
Stochastic Indices Trading Divergence Example:
In the stock indices chart below we spot two chart points, chart point A and chart point B ( swing highs )
Then using Stochastic indicator we check the highs made by the Stochastic technical indicator, these are highs which are directly below the Chart points marked A and B.
We then draw one line on the stock indices chart and another line on the Stochastic indicator.
Stochastic Indices Divergence Meaning - Bullish Divergence Stochastic - Bearish Divergence Stochastic - Stochastic Divergence Guide
How to trade Stochastic indices divergence
In order to trade Stochastic indices divergence setup we look for the following setups:
HH - Higher High - two highs but the last one is higher
LH - Lower High - two highs but the last one is lower
HL - Higher Low - 2 lows but the last one is higher
LL - Lower Low - two lows but the last one is lower
First let us look at examples of these indices trading divergence terms
Stochastic Divergence Guide
Stochastic Stock Indices Divergence Definition - Stochastic Divergence Indices Guide - Stochastic Indices Divergence Strategy Course - Stochastic Divergence Indices Trading PDF
There are two types of indices Stochastic divergence setups:
- Stochastic Classic Divergence
- Stochastic Hidden Divergence
