Trading Oil With Divergence on MT4 MT5 PDF Free Download
Divergence Oil Trading Setup is one of the trade setups used by Oil traders. It involves looking at a oil chart and one more oil indicator. For our example we shall use the MACDcrude oil technical indicator.
To spot this oil divergence trading setup find 2 chart points at which crude oil price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between crude oil price and momentum.
To look for divergence oil setup we look for two chart points, two highs that form an M-shape on the oil chart or 2 lows that form a W-Shape on crude trading chart. Then look for the same M-shape or W-Shape on the oil indicator you use to trade.
Example of a Crude Oil Divergence Setup Trade Setup:
In the crude oil chart below we spot 2 chart points, point A and point B (swing highs). These 2 chart points form an M-shape on the crude oil price chart.
Then using MACD indicator we check highs made by MACD technical indicator, these are highs that are directly below Chart points A and B.
We then draw one line on the oil chart & another line on the MACD crude oil technical trading technical indicator.
Drawing Oil Trading Divergence Oil Trading Lines
The oil chart above shows example of one of the four types of oil divergence setups, the one oil divergence trading set up above is known as hidden bearish oil divergence trading setup, one of the best type to trade. Types of oil divergences are covered in the next learn oil tutorial lesson.
How to spot oil divergence setups
In order to spot Crude Oil divergence trading signal we look for following:
- HH=Higher High- two highs but the last one is higher
- LH= Lower High- 2 highs but the last one is lower
- HL=Higher Low- 2 lows but the last one is higher
- LL= Lower Low- 2 lows but the last one is lower
First let us look at the illustrations of these crude oil divergence trading terms:
M-shapes dealing with Crude Oil price Highs
W Shapes dealing with Oil price lows
Example of M Shapes on Crude Oil Charts
Examples of W Shapes on Oil Trading Charts
Now that you have learned the oil divergence trading terms that are used to explain divergence oil set-up. Let us look at the two types of divergences and how to trade these oil chart setups.
There two types are:
- Classic Divergence Oil Trading Setups
- Hidden Divergence Oil Trading Setups
These two set ups are described on following guides below
Classic Divergence Oil Trading Setup
Hidden Divergence Oil Trading Setup
Trading Oil With Divergence on MT4 MT5 PDF Download - Trading Oil With Divergence on MT4 MT5 PDF Free Download - MT4 MT5 Divergence Oil Tutorial.
