RSI Indices Classic Bullish Divergence & Indices Trading Classic Bearish Divergence Indices Trading Setups

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

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

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

There are two types of RSI Classic divergence trading setups:

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

Classic Stock Indices Bullish Divergence

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

Classic Stock Indices Bullish Divergence - RSI Trading Strategies

Classic bullish stock trade divergence warns of a possible change in the market trend from down to up. This is because even though the price went lower the volume of sellers who pushed the price lower was less as illustrated by the RSI indicator. This demonstrates underlying weakness of the downwards trend.

Classic Indices bearish divergence

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

Indices Trading Classic Bearish Divergence Indices Trading with RSI Indicator Indices Trading Strategies

Classic indices trading bearish divergence warns of a possible change in the 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 indicator. This demonstrates underlying weakness of the up-wards trend.