Hidden Bullish and Commodity Hidden Bearish Divergence Commodities

Hidden divergence pattern is used as a possible sign for a trend continuation after the price has retraced. It is a trading signal that the original commodity trend is resuming. This is the best setup to trade because it is in same direction as that of the continuing market trend.

Commodities Hidden Bullish Divergence

This setup happens when price is forming a higher low (HL), but the oscillator (technical indicator) is displaying a lower low (LL). To remember them easily think of them as W-shapes on Chart patterns. It forms when there is a retracement in an up-wardupwards trend.

The example illustrated & explained below portrays an image of this commodity setup, from the screenshot the price made higher low (HL) but the technical indicator made a lower low (LL), this portrays that there was a diverging trade signal between the price and indicator. This signal highlights that soon the commodity market up commodity trend is going to resume. In other words it portrays this was just a retracement in an up-wardupwards trend.

This confirms that a market price retracement move is complete and indicates underlying strength of an upward trend.

Commodity Trading Hidden Bearish Divergence Setup

This setup happens when price is forming a lower high (LH), but the oscillator is showing a higher high (HH). To remember them easily think of them as M-shapes on Chart patterns. It forms when there is a retracement in a downwards trend.

The example illustrated & explained below portrays an image of this commodity setup, from the screenshot the price made lower high (LH) but the technical indicator made a higher high (HH), this portrays that there was a divergence pattern between the price & the indicator. This portrays that soon the commodity market down commodity trend is going to resume. In other words it portrays this was just a retracement in a downward trend.

This confirms that a market price retracement move is complete and indicates underlying strength of a downwards trend.

Other popular technical indicators used are CCI indicator (CCI), Stochastic Indicator, RSI and MACD. MACD and RSI Indicator are the best indicators.

NB: Hidden divergence setup is the best type divergence setup to trade because it gives a trading signal that's in the same direction with the current market price trend, thus the setup has a high reward to risk ratio. It provides for best possible entry.

However, one should combine this commodity setup with another indicator like the stochastic oscillator or moving average and buy when the commodity instrument is oversold, and sell when the commodity instrument is overbought.

Combining Hidden Divergence Setup with Moving Average Crossover Method

A good indicator to combine these commodity setups is the moving average indicator using MA cross over method. This will create a good strategy.

MA Crossover Technique

In this method, once the signal is given, one will then wait for the MA cross over method to give a buy/sell commodity signal in same direction, if there is a bullish divergence set up between the price and technical indicator, wait for the MA crossover system to give an upwards cross-over signal, while for a bearish diverging pattern wait for the MA crossover method to give a downward bearish crossover signal.

By combining this trading signal with other technical indicators this way one will avoid whipsaws when it comes to trading this signal.

Combining with Commodities Trading Fib Retracement Levels

For this example we will use an upward market trend. We shall use MACD technical indicator.

Because the hidden divergence pattern is just a retracement in an upwards trend we can combine the commodity trading signal with most popular retracement tool that is the Fibonacci retracement levels. The example illustrated and explained below portrays that when this commodity set-up appeared on the trading chart, the price had just hit 38.2% level. When price tested this level, this would have been a good level to place a buy trade order.

Combining with Commodities Trading Fib Expansion Levels

In the commodity example above once the buy trade was placed, one would then need to calculate where to put take profit for this trade. To do this a trader would need to use the Commodities Trading Fib Expansions.

The Fibo expansion was drawn as shown and illustrated on the commodity chart as shown and descrided below.

For this example there were 3 take profit areas:

Expansion Level 61.80% - 131 pips profit

Expansion Level 100.00% - 212 pips profit

Expansion Level 161.80% - 337 pips profit

From this strategy combined with Fib indicator would have provided a good strategy with a good amount of profit set using these take profit order levels.