RSI Classic Bullish Divergence and Classic Bearish Divergence Indices 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 and begin going in the opposite direction. For this reason 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:
- Indices Classic Bullish Divergence Setup
- Indices Classic Bearish Divergence Setup
Classic Stock 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 Bullish Divergence - RSI Trading Strategies
Classic bullish stock trade divergence warns of a possible change in the market trend from downwards to upwards. This is because even though the price moved lower the volume of sellers that moved the price lower was less as illustrated by RSI. This demonstrates underlying weakness of the downward trend.
Classic 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 Classic Bearish Divergence Indices with RSI Indicator Indices Strategies
Classic indices trading bearish divergence warns of a possible change in the trend from upwards to downwards. This is because even though the price moved higher the volume of buyers that moved the price higher was less as illustrated by RSI. This demonstrates underlying weakness of the up-wards trend.
