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.
XAU USD Classic Bullish Divergence
Classic bullish divergence forms when the price is making/forming lower lows ( LL ), but oscillator technical is forming/making higher lows (HL). The example illustrated & shown below shows picture of this setup.
XAUUSD Classic Bullish Divergence - Bullish Divergence XAUUSD
This example uses MACD as a Gold divergence technical indicator.
From the above bullish divergence illustration the price made a lower low(LL) but the indicator made a higher low(HL), this portrays there is a divergence between the price and the technical 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 just as is shown by MACD indicator. This reflects underlying weakness of the downwards trend.
Gold Hidden Bullish Divergence
This bullish divergence setup happens when the price is making/forming a higher low ( HL ), but the oscillator technical indicator is displaying a lower low ( LL ). To remember easily think of them as W shapes on Charts. It occurs when there's a retracement in an upward trend.
The bullish divergence example shown below shows screen-shot of this gold 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 shows that soon the market up trend is going to resume. In other words it highlights 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.
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