RSI Classic Bullish Divergence and Classic Bearish Divergence Indices Setups
Stock Index classic divergence is used by the Stock Index traders as a possible sign for a trend reversal. Classic stock trade divergence setup is used when looking and searching for an area where the price could reverse and begin going in the in the opposite trend trend trend trend trend trend trend trend direction. For this reason classic divergence setup is used as a low risk entry method & also as an accurate way to exit 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 in your stock trades are very small relative to the potential reward.
- Classic stock trade divergence is used to predict the optimum level at which to exit a trade
There are 2 types of RSI Classic divergence trading setups:
- Index Classic Bullish Divergence Setup
- Index 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 under-lying weakness of the downwards trend.
Classic bearish divergence
Classic indices trading bearish divergence occurs when trading price is forming/making a higher high (HH), but oscillator trading is lower high (LH).
Index 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 upward trend.
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