Moving Average Convergence and Divergence MACD Classic Bullish and Bearish Divergence
Moving Average Convergence and Divergence MACD Classic divergence is used as a possible sign for a commodity trend reversal. Classic divergence is used when looking for an area where commodity price could reverse & begin going in the opposite direction. For this reason classic divergence is used as a low risk entry method and also as an accurate way of exit out of a trade.
1. It is a low risk method to sell near the commodities trading market tops or buy near the commodities trading market bottom, this makes the risk on your trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Commodity trade.
There are two types:
- Commodities Trading Classic Bullish Divergence
- Commodity Trading Classic Bearish Divergence
Commodity Classic Bullish Divergence
Classic bullish divergence occurs when price is forming lower lows (LL), but oscillator indicator is making higher lows (HL).
Moving Average Convergence & Divergence MACD Commodity Classic Bullish Divergence
Classic bullish divergence warns of a possible change in commodity trend from down to up. This is because even though the commodity price went lower the volume of sellers who pushed the commodity price lower was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the downwards trend.
Classic bearish Commodities Trading Divergence Setup
Classic bearish divergence occurs when price is forming a higher high (HH), but oscillator indicator is lower high (LH).
Moving Average Convergence & Divergence MACD Commodity Trading Classic Bearish Divergence
Classic bearish divergence warns of a possible change in commodity trend from up to down. This is because even though the commodity price went higher the volume of buyers who pushed the commodity price higher was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the upwards trend.
