RSI Oil Classic Bullish Divergence and Classic Bearish Divergence Trade Setups

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

• Classic oil divergence is a low risk method to sell near the top or buy near the bottom of a oil market trend, this makes the risk on your trades are very small relative to the potential reward.

• Classic oil divergence is used to predict the optimum point at which to exit a oil trade

There are 2 types of RSI Classic oil divergence setups:

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

Classic Oil Trade Bullish Divergence

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

Classic Oil Bullish Divergence - RSI Oil Methods

Classic bullish divergence warns of a possible change in the market 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 illustrated by the RSI indicator. This demonstrates underlying weakness of the down ward trend.

Classic Oil Trade bearish divergence

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

Oil Classic Bearish Divergence with RSI Oil Indicator Methods

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