Moving Average Convergence and Divergence MACD Classic Bullish and Bearish Divergence
Moving Average Convergence and Divergence MACD Classic divergence is used as a possible sign for a commodity trend reversal. Classic divergence is used when looking for an area where commodities price could reverse & start going in the opposite direction. For this reason classic divergence is used as a low risk entry technique & also as an accurate way of exit out of a trade.
1. It is a low risk method to sell near the commodity market tops or buy near the commodity market bottom, this makes the risk on your trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Commodities trade.
There are two types:
- Commodity Trading Classic Bullish Divergence
- Commodities Trading Classic Bearish Divergence
Commodity Trading Classic Bullish Divergence
Classic bullish divergence occurs when commodities price is forming lower lows ( LL ), but the oscillator indicator is forming higher lows (HL).
Moving Average Convergence & Divergence MACD Commodity Trading Classic Bullish Divergence
Classic bullish divergence warns of a possible change in commodity trend from down to up. This is because even though the commodities trading price went lower the volume of sellers who pushed the commodities trading price lower was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This indicates underlying weakness of the downwards trading trend.
Classic bearish Commodities Trading Divergence Setup
Classic bearish divergence occurs when commodities price is showing a higher high ( HH ), but the oscillator indicator is lower high (LH).
Moving Average Convergence & Divergence MACD Commodity Trading Classic Bearish Divergence
Classic bearish divergence warns of a possible change in commodity trend from up to down. This is because even though the commodities trading price went higher the volume of buyers who pushed the commodities trading price higher was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This indicates underlying weakness of the upwards trading trend.
