Trading Commodities With Divergence on MT4 MT5 PDF Download
Divergence Commodity Trading Setup is one of the trade setups used by Commodities traders. It involves looking at a commodity chart and one more commodity indicator. For our example we shall use the MACDcommodities technical indicator.
To spot this commodity divergence trading setup find 2 chart points at which commodities price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between commodities price & momentum.
To look for divergence commodity setup we look for two chart points, two highs that form an M-shape on the commodities trading chart or two lows that form a W Shape on commodities trading chart. Then look for the same M-shape or W-Shape on the indicator you use to trade.
Example of a Commodities Trading Divergence Trade Setup:
In the commodities chart below we spot 2 chart points, point A and point B (swing highs). These 2 chart points form an M-shape on the commodities 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 commodities trading chart & another line on the MACD commodities technical trading technical indicator.
Drawing Commodity Trading Divergence Commodity Trading Lines
The commodity chart above shows example of one of the four types of commodity divergence setups, the one commodity divergence setup above is known as hidden bearish commodity divergence trading setup, one of the best type to trade. Types of commodity divergences are covered in the next learn commodity tutorial lesson.
How to spot commodity divergence setups
In order to spot Commodity divergence trading signal we look for 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 commodity divergence trading terms:
M-shapes dealing with Commodity price Highs
W Shapes dealing with Commodities price lows
Example of M Shapes on Commodity Charts
Examples of W Shapes on Commodities Trading Charts
Now that you have learned the commodity divergence trading terms that are used to explain divergence commodity set-up. Let us look at the two types of divergences and how to trade these commodity chart setups.
There two types are:
- Classic Divergence Commodity Trading Setups
- Hidden Divergence Commodity Trading Setups
These 2 set ups are explained on the following tutorials below
Classic Divergence Commodity Trading Setup
Hidden Divergence Commodity Trading Setup
Trading Commodities With Divergence in MetaTrader 4 MT5 PDF Download - Trading Commodities With Divergence on MT4 MT5 PDF Download - MT4 MT5 Divergence Commodity Tutorial.
