RSI Indices Reverse Bullish Divergence and Reverse Bearish Divergence Indices Trading Setups
Indices reverse divergence is used as a possible sign for a indices trend reversal. Reverse indices divergence setup is used when looking for an area where stock indexes price could reverse and start moving in the opposite direction. For this reason indices reverse divergence is used as a low risk entry method and also as an accurate way of exit out of a indices trade.
- Reverse indices divergence is a low risk method to sell near the top or buy near the bottom of a indices market trend, this makes the risk on your stock indexes trades are very small relative to the potential reward.
- Reverse indices divergence is used to predict the optimum point at which to exit a indices trade
There are two types of RSI Reverse indices divergence trading setups:
- Reverse Bullish Divergence Indices Trading Setup
- Reverse Bearish Divergence Indices Trading Setup
Reverse Stock Indexes Bullish Divergence
Reverse indices bullish divergence occurs when stock indexes price is making lower lows (LL), but the RSI indicator is making higher lows (HL).
Reverse Indices Bullish Divergence - What is RSI Reverse Divergence?
Reverse RSI bullish indices divergence warns of a possible reversal in the indices market trend from down to up. This is because even though the stock indexes price went lower the volume of sellers that pushed the indices prices lower was less as indicated by the RSI indices indicator. This signals underlying weakness of the downward stock indexes trend.
Reverse Indices bearish divergence
Reverse RSI indices bearish divergence occurs when stock indexes price is making a higher high (HH), but the RSI indicator is lower high (LH).
What is RSI Reverse Indices Divergence? - RSI Reverse Bullish Divergence and RSI Reverse Bearish Divergence
RSI reverse indices bearish divergence warns of a possible reversal in the indices trend from up to down. This is because even though the stock indexes price went higher the volume of buyers that pushed the stock indexes price higher was less as indicated by the RSI indices indicator. This signals underlying weakness of the upward stock indexes trend.