MACD Classic Bullish & Bearish Divergence Trade Setup
MACD Classic divergence pattern is used as a possible signal for a trend reversal. MACD classic divergence is used when looking for an area where gold trading price could reverse & begin going in the opposite market direction. For this reason MACD classic divergence setup is used as a low risk entry method/technique and also as an accurate to exit of a trade position.
1. It is a low risk method to open a sell at near the market tops or buy near the market bottom, this makes the risks on your trade positions are small in relation to the potential reward.
2. It is used to predict the ideal optimum zone at which to exit a trade position.
There are two different types of Classic Divergence:
- XAU/USD Classic Bullish Divergence
- XAU/USD Classic Bearish Divergence
XAU/USD Classic Bullish Divergence in XAU USD Trading
Classic bullish divergence in gold occurs when price is making lower lows ( LL ), but the oscillator is making/forming higher lows (HL).
MACD Classic Bullish Divergence in Gold - MACD Divergence Strategy
Classic bullish divergence in gold trading warns of a possible change in the trend from downwards to upwards. This is because even though price headed & moved lower the volume of the sellers(bears) who moved price lower was less as shown by the MACD. This demonstrates underlying weakness of the down-ward trend.
Classic bearish divergence in XAU USD Trading
Classic bearish divergence in gold trading occurs when price is displaying a higher high ( HH ), but the oscillator technical is lower high (LH).
MACD Classic Bearish Divergence in Gold - MACD Divergence Strategy
Classic bearish divergence warns of a possible reversal in market trend from upwards to downward. This is because even though price headed & moved higher the volume of the buyers that moved price higher was less like displayed and illustrated by the MACD. This demonstrates underlying weakness of the upwards trend.
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