What is Indices Divergence?

What is Divergence Indices Definition? - Divergence is a stock indices trading setup used by Indices traders -indices divergence trading involves looking at a indices chart and a indices indicator - for example MACD indicator.

To find this indices divergence trading setup find two chart points which stock indices price makes a new swing high or a new swing low but the MACD technical indicator does not do the same, this indices trading signals a divergence between stock indices price and MACD indicator momentum.

For a divergence stock indices trading setup we look for two chart points, two highs that form an M shape on the stock indices chart or two lows that form a W Shape on the stock indices chart. Then look for the same M shape or W Shape on the Indices MACD indicator.

Example of a Stock Indices Divergence Trade Setup:

In the stock indices chart below we identify two chart points, point A and point B (swing highs). These two indices chart points form an M shape on the trading stock indices price chart.

Then using indices MACD technical indicator we check the highs made by the MACD technical indicator, these are the highs that are directly below Chart points marked A and B.

We then draw one line on the stock indices chart and another line on the MACD indices technical indicator.

Divergence Indices Trading Signals - What is Divergence Stock Indices Meaning? - What is Divergence Indices Definition?

The indices chart above shows an example of hidden bearish indices divergence.

hat is Divergence Indices Trading?

In order to trade Stock Indices divergence trading signal we look for the following:

• HH : Higher High - two highs but the last one is higher
• LH : Lower High - two highs but the last one is lower
• HL : Higher Low - two lows but the last one is higher
• LL : Lower Low - two lows but the last one is lower

Divergence Indices Trading Terms Definition: What is Divergence Indices Trading? - What is Indices Divergence?

M shapes on indices charts dealing with stock indices price Highs

W Shapes on indices charts dealing with stock indices price lows

Example of M Shapes on Stock Indices Charts - What is Bearish Divergence?

Examples of W Shapes on Stock Indices Charts - What is Bearish Divergence?

What is Divergence Indices Trading? - What is Indices Divergence? - What is Bullish Indices Trading Divergence? - What is Divergence Stock Indices Meaning? - What is Divergence Indices Definition?