MACD Classic Bullish & Bearish Divergence

MACD Classic divergence is used by traders as a possible sign for a oil trend reversal. MACD classic divergence is used when looking for an area where crude trading price could reverse and start going in the opposite oil trend direction. For this reason MACD classic divergence is used as a low risk entry method and also as an accurate way of exit out of a trade.

1. It is a low risk strategy to sell near the market top or buy near the market bottoms, this makes the risk on your crude oil trades are very small relative to the potential reward.

2. It's used to predict the optimum level at which to exit a Oil trade.

There are 2 types of Oil Classic Divergence:

1. Crude Oil Classic Bullish Divergence
2. Oil Classic Bearish Divergence

Oil Classic Bullish Divergence in Oil

Classic bullish divergence in oil occurs when price is forming lower lows ( LL ), but the oscillator technical indicator is forming higher lows ( HL ).

MACD Classic Bullish Divergence in Oil - MACD Divergence Strategy

Classic bullish divergence in oil 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 that pushed the crude trading price lower was less as shown by the MACD indicator. This demonstrates underlying weakness of the down ward trend.

Classic bearish divergence in Oil

Classic bearish divergence in oil occurs when price is showing a higher high ( HH ), but the oscillator technical indicator is showing a lower high ( LH ).

MACD Classic Bearish Divergence in Oil - MACD Divergence Oil Strategy

Classic bearish divergence warns of a possible change in market oil trend from up to down. This is because even though the price went higher the volume of buyers who pushed the crude price higher was less as shown by the MACD indicator. This indicates underlying weakness of the upward trend.