What is Stochastic Commodity Trading Divergence?
Stochastic Commodity Trading Divergence Commodities is one of the commodity strategy used by online commodities traders to analyze commodity chart commodities price movement. Stochastic Commodity Trading Divergence involves looking at a commodity chart and one more commodities technical indicator - Stochastic indicator. For our this commodity divergence tutorials we shall use the Stochastic indicator - Stochastic Commodity Trading Divergence.
To spot this Stochastic commodities divergence trading setup find two commodity chart points at which commodities price makes a new swing high or a new swing low but the Stochastic technical indicator doesn't do the same, thus indicating that there is a divergence between the commodities price & momentum.
Stochastic Commodity Trading Divergence Example:
In the commodities chart below we spot two commodity 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 the highs which are direct below the Chart points marked A and B.
We then draw one line on the commodities chart and another line on the Stochastic indicator.
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How to trade Stochastic commodity trading divergence
In order to trade Stochastic commodities trading divergence set-up we look for the following setups:
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 - two lows but the last one is lower
First let us look at examples of these commodities divergence trading terms
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There are two different types of commodity Stochastic divergence setups:
- Stochastic Classic Divergence
- Stochastic Hidden Divergence
