Moving Average Convergence and Divergence MACD Classic Bullish and Bearish Divergence
Moving Average Convergence and Divergence MACD Classic divergence is used as a possible sign for a oil trend reversal. Classic divergence is used when looking for an zone where crude oil price could reverse and begin going in opposite direction. For this reason classic divergence is used as a low risk entry technique and also as an accurate way of exit out of a trade.
1. It is a low risk technique to sell near the oil market top or buy near the oil 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 Oil trade.
There are two types:
- Oil Classic Bullish Divergence
- Crude Oil Classic Bearish Divergence
Oil Classic Bullish Divergence
Classic bullish divergence occurs when crude oil price is forming lower lows ( LL ), but the oscillator technical indicator is forming higher lows ( HL ).
Moving Average Convergence & Divergence MACD Oil Classic Bullish Divergence
Classic bullish divergence warns of a possible change in the oil trend from down to up. This is because even though the crude oil price went lower the volume of sellers that pushed the crude trading price lower was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the downward trend.
Classic bearish Crude Oil Trading Divergence Setup
Classic bearish divergence occurs when crude oil price is showing a higher high ( HH ), but the oscillator technical indicator is showing a lower high ( LH ).
Moving Average Convergence & Divergence MACD Oil Classic Bearish Divergence
Classic bearish divergence warns of a possible change in oil trend from up to down. This is because even though the crude oil price went higher the volume of buyers who pushed the crude trading price higher was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the upward trend.
