How Do You Analyze Commodity Trading Divergence Commodities & Trade Divergence Setups in Commodities?

How Do You Interpret Commodity Trading Divergence Commodities & Trade Divergence Setups in Commodities?

Divergence Commodity Trading Definition - Divergence commodity is one of the commodity setups used by Commodities traders. Divergence commodity involves looking at a commodity chart and one more commodity indicator. For our divergence commodity example we shall use the MACD commodities trading technical indicator.

To spot this commodity divergence setup find two commodity chart points at which commodities price makes a new swing high or a new swing low but the MACD indicator does not, indicating a commodity divergence between commodities price & momentum.

To look for divergence commodity signal we look for 2 chart points, two highs which form an M shape on the commodities trading chart or two lows that form a W Shape on commodities trading chart. Then look for same M shape or W Shape on commodities trading indicator that you use to commodity trade - for example RSI indicator, MACD indicator or Stochastic Oscillator indicator.

Example of a Commodity Divergence Setup Trade Setup:

In the commodities chart below we spot two commodity chart points, point A and point B (swing highs). These two chart points form an M shape on commodities price chart.

Then using MACD indicator we check highs made by MACD technical indicator, these are highs that are directly below commodity trading Chart points A & B.

We then draw one line on the commodities trading chart & another line on the MACD indicator.

Drawing Divergence Commodity Trading Lines - Commodity Trading Divergence Commodity Strategy - Commodity Trading Divergence Commodities Entry & Exit

The commodity chart above shows example of one of the four types of commodity divergence setup, the one above is known as hidden bearish commodity trading divergence. Types of commodity divergence setups are covered in the next learn commodity lesson.

Trading Commodities spot divergence commodity setup

In order to spot Commodity Trading divergence signal we look for the following:

• HH - Higher High - 2 highs but the last one is higher
• LH - Lower High - 2 highs but the last one is lower
• HL - Higher Low - two 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 divergence commodity terms:

M shapes on Commodities charts dealing with Commodity price Highs

W Shapes on Commodities charts dealing with Commodity price lows

Example of M Shapes on Commodities Trading Charts

Examples of W Shapes on Commodities Charts

Now that you have learned the divergence commodity terms that are used to explain divergence commodity set-up. Let us look at the two types of commodity divergences and how to commodity trade these commodities trading divergence commodity chart setups.

The two commodities trading divergence types which are:

1. Classic Commodity Trading Divergence
2. Hidden Commodity Trading Divergence

These two commodity divergence setups - classic commodities divergence trading & hidden commodities divergence trading are described on the learn commodity guides in the commodity trading lessons tutorials on this learn commodity website located at the navigation menu under the topics learn commodity lessons.

How Do I Analyze Commodity Trading Divergence Commodities & Trade Divergence Setups in Commodity Trading