Gold Trading Divergence Strategy

Divergence Gold Definition - Divergence gold trading is one of the gold trading setups used by Gold traders. Divergence gold trading involves looking at a gold chart & one more gold indicator. For our divergence example we shall use the MACD xauusd technical indicator.

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

To look for divergence gold signal we look for 2 chart points, 2 highs which form an M shape on the gold chart or 2 lows that form a WShape on the xauusd chart. Then look for the same M-shape or WShape on the XAUUSD indicator that you use to trade - for examples RSI indicator, MACD indicator or Stochastic Oscillator indicator.

Example of a XAUUSD Divergence Trade Setup:

In the gold chart below we spot two chart points, point A & point B (swing highs). These two chart points form an M-shape on the xauusd price chart.

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

We then draw one line on the gold chart & another line on the MACD technical indicator.

Drawing Divergence Gold Lines - Gold Divergence Strategy - Gold Trading Divergence Entry & Exit

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

How to spot divergence gold trading setup

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

• HH - Higher High - two highs but the last one is higher
• LH - Lower High - two 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 the illustrations of these divergence gold trading terms:

M shapes on Gold charts dealing with XAUUSD price Highs

W Shapes on Gold charts dealing with XAUUSD price lows

Example of M Shapes on Gold Charts

Examples of W Shapes on XAUUSD Charts

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

The two gold divergence types which are:

1. Classic Gold Divergence
2. Hidden Gold Divergence

These two xauusd trading divergence set ups - classic divergence trading & hidden divergence trading are described on the following learn gold guides in the gold lessons tutorials on this website located at the navigation menu under the topics learn gold trading lessons.