How Do I Read Commodity Trading Divergence & Trade Divergence Setups in Commodity Trading?

How Do I Trade Commodity Trading Divergence & Trade Divergence Setups in Commodity Trading?

Divergence Commodity Trading Definition - Divergence commodity trading is one of the commodity trading setups used by Commodity traders. Divergence commodity trading involves looking at a commodity chart and one more commodity indicator. For our divergence commodities trading example we shall use the MACD commodity technical indicator.

To spot this  commodities trading divergence setup find two chart points at which commodity trading price makes a new swing high or a new swing low but the MACD indicator does not, indicating a commodities trading divergence between commodity price & momentum.

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

Example of a Commodities Trading Divergence Trade Setup:

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

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

We then draw one line on the commodity chart & another line on the MACD commodity technical technical indicator.

Drawing Divergence Commodity Lines - Commodity Divergence Strategy - Commodity Trading Divergence Entry & Exit

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

Commodity Trading spot divergence commodity trading setup

In order to spot Commodities Trading divergence 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 - 2 lows but the last one is higher
• LL - Lower Low - two lows but the last one is lower

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

M shapes on Commodity charts dealing with Commodities price Highs

W Shapes on Commodity charts dealing with Commodities price lows

Example of M Shapes on Commodity Trading Charts

Examples of W Shapes on Commodities Charts

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

The two commodity divergence types which are:

1. Classic Commodity Trading Divergence
2. Hidden Commodity Trading Divergence

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

How Do I Trade Commodity Trading Divergence & Trade Divergence Setups in Commodity Trading