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MACD Indices Classic Bullish and Bearish Divergence

MACD Indices Classic divergence is used as a possible sign for a indices trend reversal. MACD classic divergence is used when looking for an area where stock indexes price could reverse and start going in the opposite indices 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 indices trade.


1. It is a low risk method to sell near the stock indexes trading market top or buy near the stock indexes trading market bottom, this makes the risk on your stock indexes trades are very small relative to the potential reward.

2. It is used to predict the optimum point at which to exit a Indices trade.


There are two types of Indices Classic Divergence:


  1. Indices Trading Classic Bullish Divergence

  2. Indices Trading Classic Bearish Divergence


Indices Trading Classic Bullish Divergence in Indices Trading

Classic bullish divergence in indices trading occurs when stock indexes price is making lower lows (LL), but the oscillator is making higher lows (HL).

MACD Indices Trading Classic Bullish Divergence in Indices Trading

MACD Indices Trading Classic Bullish Divergence in Indices Trading - MACD Divergence Indices Trading Strategy



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


Classic bearish divergence in Indices Trading

Classic bearish divergence in indices trading occurs when stock indexes price is making a higher high (HH), but the oscillator is lower high (LH).

MACD Indices Trading Classic Bearish Divergence in Indices Trading

MACD Indices Trading Classic Bearish Divergence in Indices Trading - MACD Divergence Indices Trading Strategy


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

 

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