XAUUSD Classic Bullish Divergence and XAUUSD Hidden Bullish Divergence
When it comes to bullish divergence there are two bullish divergence setups mainly traded in the market - these setups are; XAUUSD Classic Bullish Divergence and XAUUSD Hidden Bullish Divergence.
XAUUSD Classic Bullish Divergence
Classic bullish divergence forms when the price is forming lower lows ( LL ), but oscillator is making higher lows (HL). The example illustrated & shown below shows a picture of this setup.
XAUUSD Classic Bullish Divergence - Bullish Divergence XAUUSD
This example uses MACD as a XAUUSD divergence indicator.
From the above bullish divergence example the price made a lower low(LL) but the technical indicator made a higher low(HL), this portrays there is a divergence between the price and the indicator. This signal warns of a possible trend reversal.
Classic bullish diverging trade signal warns of a possible change in trend from downward to upward. This is because even though price moved lower the volume of sellers that moved price lower was less as illustrated by MACD indicator. This indicates underlying weakness of the down-ward trend.
Gold Hidden Bullish Divergence
This bullish divergence setup happens when the price is forming a higher low ( HL ), but the oscillator (indicator) is displaying a lower low ( LL ). To remember easily think of them as W-shapes on Chart patterns. It occurs when there is a retracement in an upward trend.
The bullish divergence example shown below shows an image of this xauusd formation, from the screen-shot the price made higher low ( HL ) but the indicator made a lower low ( LL ), this portrays that there was a diverging trade signal between the price and indicator. This signal displays that soon the market up trend is going to resume. In other words it displays this was just a retracement in an upwards trend.
XAUUSD Hidden Bullish Divergence- Bullish Divergence XAUUSD
This bullish divergence confirms that a retracement move is complete and indicates underlying momentum of an upward trend.
