How Do I Read CFD Trading Divergence CFD and Trade Divergence Setups in CFD?

How Do You Trade CFD Divergence CFD and Trade Divergence Setups in CFD?

Divergence CFD Trading Definition - Divergence cfd is one of the cfd setups used by CFD traders. Divergence cfd involves looking at a cfd chart & one more cfd indicator. For our divergence cfd example we shall use the MACD cfd indicator.

To spot this  cfd divergence setup find two chart points at which cfd price makes a new swing high or a new swing low but the MACD indicator doesn't, indicating a cfd divergence between cfd price & momentum.

To look for divergence cfd signal we look for two chart points, two highs that form an M shape on the cfds trading chart or 2 lows that form a W-Shape on the cfds trading chart. Then look for same M shape or W Shape on the indicator that you use to cfd trade - for examples RSI indicator, MACD indicator or Stochastic Oscillator indicator.

Example of a CFDs Divergence Setup Trade Setup:

In the cfds chart below we identify 2 chart points, point A and point B (swing highs). These 2 chart points form an M shape on the cfd price chart.

Then using MACD indicator we check highs made by MACD technical indicator, these are the highs that are directly below cfd trading Chart points A & B.

We then draw one line on the cfds trading chart & another line on the MACD indicator.

Drawing Divergence CFD Lines - CFD Trading Divergence Strategy - CFD Trading Divergence CFD Entry and Exit

The cfd chart above shows example of one of the 4 types of cfd divergence setup, the one above is known as hidden bearish cfd trading divergence. Types of cfd divergence setups are covered in the next learn cfd lesson.

Trading CFD spot divergence cfd setup

In order to spot CFD Trading divergence trading signal we look for the following:

• HH - Higher High - 2 highs but the last one is higher
• LH - Lower High - 2 highs but the last one is lower
• HL - Higher Low - two lows but the last one is higher
• LL - Lower Low - 2 lows but the last one is lower

First let us look at the illustrations of these divergence cfd terms:

M shapes on CFD charts dealing with CFD price Highs

W Shapes on CFDs charts dealing with CFD price lows

Example of M Shapes on CFDs Charts

Examples of W Shapes on CFDs Charts

Now that you have learned the divergence cfd terms that are used to explain divergence cfd set-up. Let us look at the two types of cfd divergences and how to cfd trade these cfds trading divergence cfd chart setups.

The two cfds trading divergence types which are:

1. Classic CFD Trading Divergence
2. Hidden CFD Trading Divergence

These two cfd divergence setups - classic divergence trading & hidden divergence trading are explained on the learn cfd tutorials in the cfd trading lessons tutorials on this learn cfd website located at the navigation menu under the topics learn cfd lessons.

Analyze CFD Trading Divergence CFD and Trade Divergence Setups in CFD?