What's Divergence Indices?

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

To find this divergence indices setup find two chart points which price makes a new swing high or a new swing low but the MACD indicator doesn't do the same, this signals a divergence between stock indices price & MACD indicator momentum.

For a divergence stock indices setup we look for 2 chart points, two highs that form an M-shape on stock indices chart or two lows that form a WShape on stock indices chart. Then look for the same M-shape or WShape on Indices MACD indicator.

Example of a Divergence Trade Setup:

In the stock indices chart below we spot two chart points, point A & point B (swing highs). These 2 chart points form an M-shape on trading stock indices price chart.

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

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

Divergence Signals - What's Divergence Stock Indices Meaning? - What's Divergence Indices Definition?

The indices chart above displays an example of hidden bearish divergence indices setup.

What is Divergence Stock Indices Trading?

In order to trade divergence stock indices 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's Divergence Indices Trading? - What's Divergence Indices?

M shapes on charts dealing with price Highs

W Shapes on charts dealing with price lows

Example of M Shapes on Charts - What's Bearish Divergence?

Examples of W Shapes on Charts - What's Bearish Divergence?

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