Bullish Indices Trading Divergence Setup

When it comes to bullish divergence there are 2 bullish divergence trading setups mainly traded in the stock indices trading market - these indices trading setups are; Stock Indices Classic Bullish Divergence and Indices Trading Hidden Bullish Divergence.

Indices Classic Bullish Divergence

Classic bullish divergence set-up occurs when stock indices trading price is making lower lows (LL), but the oscillator is making higher lows (HL). The example explained and illustrated below shows a picture of this indices trading setup.

Bullish Divergence Indices Trading

This example uses MACD indicator as a Indices divergence indicator.

From the above bullish divergence example the stock indices price made a lower low(LL) but the indicator made a higher low(HL), this shows there is a divergence between the stock indices price & the indicator. This signal warns of a possible indices trend reversal.

Classic bullish diverging signal warns of a possible change in indices trend from down to up. This is because even though the stock indices price went lower the volume of sellers who pushed the stock indices price lower was less as illustrated by MACD technical indicator. This indicates underlying weakness of the downward Indices trend.

Stock Indices Trading Hidden Bullish Divergence

This bullish divergence setup happens when stock indices trading price is making a higher low (HL), but the oscillator (indicator) is showing a lower low (LL). To remember them easily think of them as W-shapes on Chart patterns. It occurs when there is a retracement in an upwards Indices trend.

The bullish divergence example explained and illustrated below shows an image of this indices trading setup, from the image the stock indices price made higher low (HL) but the indicator made a lower low (LL), this shows that there was a diverging signal between the stock indices price and indicator. This signal shows that soon the stock indices trading market up indices trend is going to resume. In other words it shows this was just a retracement in an upwards indices trend.

Indices Trading Hidden Bullish Divergence- Bullish Divergence Indices Trading

This bullish divergence confirms that a retracement move is complete and indicates underlying strength of an upward indices trend.