RSI Commodity Indicator Divergence Commodity Trading Setups
Commodity Trading Divergence is one of the trade setups used by Commodity traders. It involves looking at a commodity chart and one more commodities trading technical indicator. For our example we shall use the RSI indicator.
To spot this commodities divergence trading setup find two chart points at which commodity price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between commodity price & momentum.
RSI Commodity Divergence Example:
In the commodity chart below we identify two chart points, point A and point B (swing highs)
Then using RSI indicator we check the highs made by the commodity trading RSI technical indicator, these are the highs that are directly below the commodity trading Chart points A & B.
We then draw one line on the commodity chart & another line on the RSI indicator.
RSI Divergence Commodity Setup - Commodity Trading Divergence using RSI Technical Indicator
How to spot commodity trading divergence
In order to spot this commodities divergence setup we look for the following:
HH=Higher High- 2 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 commodity trading terms
Divergence Commodity Trading Terms Definition
Commodity Divergence Terms Definition Examples
There are two types of commodities trading divergence setups:
- Classic Commodity Trading Divergence
- Hidden Commodities Trading Divergence
