RSI Stock Indices Classic Bullish Divergence and Classic Bearish Divergence Trading Setups

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

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

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

There are two types of RSI Classic Stock Indices divergence trading setups:

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

Classic Stock Indices Bullish Divergence

Classic Stock Indices bullish divergence occurs when price is making lower lows (LL), but the oscillator is making higher lows (HL).

Classic Stock Indices Bullish Divergence - RSI Stock Indices Trading Strategies

Classic bullish Stock Indices divergence warns of a possible change in the Stock Indices market trend from down to up. This is because even though the Stock Indices price went lower the volume of sellers that pushed the price lower was less as illustrated by the RSI Stock Indices indicator. This indicates underlying weakness of the downward Stock Indices trend.

Classic Stock Indices Bearish Divergence

Classic Stock Indices bearish divergence occurs when price is making a higher high (HH), but the oscillator is lower high (LH).

Classic Bearish Divergence Trading with RSI Indicator Stock Indices Strategies

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