Divergence MACD Classic Bullish and Bearish Setups
MACD Classic divergence is used as a possible sign for a trend reversal. Classic divergence is used when looking for an zone where price could reverse & start going in opposite direction. For this reason classic divergence is used as a low risk entry method & also as an accurate way of exit out of a trade.
1. It is a low risk technique to sell near the market top or buy near the market bottoms, this makes the risk on your trades are very small relative to the potential reward.
2. It's used to predict the optimum point at which to exit a Forex trade.
There are two types:
- Classic Bullish Forex Trading Divergence
- Classic Bearish Divergence
Classic Bullish FX Trading Divergence
Classic bullish divergence occurs when price is making lower lows (LL), but the divergence macd indicator is making higher lows (HL).
Divergence MACD Classic Bullish
Classic bullish divergence warns of a possible change in the trend from down to up. This is because even though the price went lower the volume of sellers who pushed the price lower was less as illustrated by the MACD indicator. This is an technical indicator of the underlying weakness of the downward trend.
Classic bearish Forex Trading Divergence Setup
Classic bearish divergence occurs when price is making a higher high (HH), but the divergence macd indicator is lower high (LH).
Divergence MACD Classic Bearish
Classic bearish divergence warns of a possible change in trend from up to down. This is because even though the price went higher the volume of buyers who pushed the price higher was less as illustrated by the Divergence MACD indicator. This is an technical indicator of the underlying weakness of the upwards trend.
Divergence MACD Hidden Bullish and Bearish Setups
MACD Hidden divergence is used as a possible sign for a trend continuation.
This divergence trade set-up forms when the price retraces to retest a previous high or low.
1. Hidden Bullish Divergence
2. Hidden Bearish Divergence
Hidden Bullish FX Trading Divergence
Forms when price is making a higher low (HL), but the MACD oscillator is showing a lower low (LL).
Hidden bullish divergence occurs when there is a retracement in an uptrend.
divergence MACD bullish
This divergence confirms that a retracement move is complete. This divergence indicates underlying strength of an uptrend.
Hidden Bearish Forex Trading Divergence
Forms when price is making a lower high (LH), but the MACD oscillator is showing a higher high (HH).
Hidden bearish divergence occurs when there is a retracement in an uptrend.
divergence MACD bearish
This divergence trade set-up confirms that a retracement move is complete. This divergence indicates underlying strength of a downtrend.
