Divergence Commodity Trading Setups

Divergence Commodity Trading Setup is one of the trade setups used by Commodity traders. It involves looking at a commodity chart and one more commodity indicator. For our example we shall use the MACDcommodity indicator.

To spot this commodities divergence setup find 2 chart points at which commodity price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between commodity price & momentum.

To look for divergence commodities setup we look for 2 chart points, 2 highs that form an M-shape on the commodity chart or two lows that form a W-Shape on the commodities trading chart. Then look for same M-shape or W-Shape on commodity indicator you use to trade.

Example of a Commodity Trading Divergence Setup 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 the commodity price chart.

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

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

Drawing Commodity Divergence Lines

The commodity chart above shows example of one of the 4 types of commodities trading divergence setups, the one commodities divergence set up above is known as hidden bearish commodities divergence setup, one of the best type to trade. Types of commodity trading divergences are covered in the next learn commodity guide lesson.

How to spot commodities trading divergence setups

In order to spot Commodity Trading divergence signal 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- 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 illustrations of these commodities divergence trading terms:

M-shapes dealing with Commodities price Highs

W-Shapes dealing with Commodity price lows

Example of M Shapes on Commodities Charts

Examples of W Shapes on Commodity Trading Charts

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

There two types are:

1. Classic Divergence Commodity Trading Setups

2. Hidden Divergence Commodity Trading Setups

These 2 setups are explained on the following guides below

Classic Divergence Commodity Trading Setup

Hidden Divergence Commodity Trading Setup

Commodity Trading With Divergence in MT4 MT5 Download - Commodity Trading With Divergence in MT4 MT5 Commodity Trading Platform PDF Free Download - MT4 Commodity Platform MetaTrader 5 Divergence Commodity Tutorial.