What is Stochastic Indices Divergence?
Stochastic Divergence Indices Trading is one of the indices trading strategy used by online stock indexes traders to analyze indices chart stock indexes price movement. Stochastic Indices Divergence involves looking at a stock indices chart and one more stock indexes technical indicator - Stochastic indicator. For our this stock indexes trading divergence tutorials we shall use the Stochastic indices indicator - Stochastic Stock Indexes Divergence.
To spot this Stochastic indices divergence trading setup find two indices chart points at which stock indexes price makes a new swing high or a new swing low but the Stochastic stock indices indicator does not do the same, thus indicating that there is a divergence between the stock indexes price and momentum.
Stochastic Indices Trading Divergence Example:
In the stock indices chart below we identify two indices chart points, chart point A and chart point B (swing highs)
Then using Stochastic stock indices indicator we check the highs made by the Stochastic indices indicator, these are the highs that are directly below the Chart points marked A and B.
We then draw one line on the stock indices chart and another line on the Stochastic stock indices indicator.
Stochastic Indices Divergence Meaning - Bullish Divergence Stochastic - Bearish Divergence Stochastic - Stochastic Divergence PDF
How to trade Stochastic indices divergence
In order to trade Stochastic indices divergence setup we look for the following setups:
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
First let us look at the examples of these indices divergence trading terms
Indices Stochastic Divergence Tutorial
Stochastic Stock Indexes Divergence Definition - Stochastic Divergence Indices Trading Tutorial - Stochastic Indices Trading Divergence Strategy PDF - Stochastic Divergence Indices Trading PDF
There are two types of indices trading Stochastic divergence setups:
- Stochastic Classic Divergence
- Stochastic Hidden Divergence