MACD Stock Classic Bullish & Bearish Divergence
MACD Stock Trading Classic divergence is used as a possible sign for a stock trend reversal. MACD classic divergence is used when looking for an area where stocks price could reverse and start going in the opposite stock 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 stock trade.
1. It is a low risk technique to sell near the stocks market tops or buy near the stocks market bottom, this makes the risk on your stocks trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Stock trade.
There are two different types of Stock Trading Classic Divergence:
- Stock Classic Bullish Divergence
- Stock Classic Bearish Divergence
Stocks Classic Bullish Divergence in Stocks Trading
Classic bullish divergence in stock trading occurs when stocks price is forming lower lows ( LL ), but the oscillator indicator is making higher lows (HL).
MACD Stock Classic Bullish Divergence in Stock Trading - MACD Divergence Strategy
Classic bullish divergence in stock trading warns of a possible change in the stock trend from down to up. This is because even though the stocks price went lower the volume of sellers that pushed the stocks price lower was less as illustrated by the MACD indicator. This indicates underlying weakness of the downward stocks trend.
Classic bearish divergence in Stocks Trading
Classic bearish divergence in stock trading occurs when stocks price is making a higher high (HH), but the oscillator indicator is lower high (LH).
MACD Stock Classic Bearish Divergence in Stock Trading - MACD Divergence Stock Strategy
Classic bearish divergence warns of a possible change in stocks market trend from up to down. This is because even though the stocks price went higher the volume of buyers who pushed the stocks price higher was less as illustrated by the MACD indicator. This indicates underlying weakness of the upward stocks trend.
