XAUUSD Classic Divergence Guide PDF
xauusd trading classic divergence is used as a possible signal for a XAUUSD trend reversal and is used by traders to analyze gold price movement and identify areas where the price could reverse and start going in the opposite direction. XAUUSD Trading classic divergence setup is used as a low risk entry method when opening a xauusd trade or when exiting a gold trade transaction.
Classic divergence xauusd strategy is a low risk method to sell near the xauusd market top or buy near the xauusd market bottom, this makes the trading risk on your trades are to be small relative to potential reward. However, this classic divergence xauusd strategy is one method with very many whipsaws & most traders do not recommend using it.
Divergence in XAUUSD is also used to predict the optimum point at which to exit an open xauusd trade. If you already have an open xauusd trade that is already profitable, a good method to identify a profit taking level would be to use the point where you spot this divergence xauusd setup.
There are two types of classic trading divergence, based on the direction of the current XAUUSD trend:
- Gold Classic Bullish Divergence
- XAUUSD Classic Bearish Divergence
Gold Trading Divergence Scanner
XAUUSD Trading classic bullish divergence forms when price is forming lower lows (LL), but the indicator is making higher lows (HL). The divergence gold trading example shown below shows classic trading divergence setup.
XAUUSD Classic Bullish Divergence
This xauusd divergence example uses MACD indicator as a gold divergence indicator.
From the above gold trading divergence scanner example the gold price made a lower low(LL) but the MACD indicator made a higher low(HL), this shows there is a divergence between the gold price & the MACD indicator. This divergence xauusd signal warns of a possible xauusd trend reversal.
Classic bullish divergence xauusd signal warns of a possible reversal in the xauusd trend from downward trend to upward trend - because even though the gold price went lower the volume of sellers that moved the gold price lower was less as shown by the MACD technical indicator. This divergence xauusd signal indicates underlying weakness of the downward xauusd trend.
Gold Trading Divergence Scanner
XAUUSD Trading classic bearish divergence forms when price is forming a higher high (HH), but the indicator is forming a lower high (LH). The gold trading divergence scanner example shown below shows an example of the classic bearish gold trading divergence xauusd setup.
XAUUSD Classic Bearish Divergence - XAUUSD Trading Divergence Scanner - XAUUSD Classic Divergence Set Up Scanner
This divergence scanner gold trading example also uses MACD technical indicator
From the above example the gold price made a higher high(HH) but the MACD indicator made a Lower High(LH), this shows there is divergence between the gold price & the MACD indicator. This divergence xauusd signal warns of a possible xauusd trend reversal.
Classic bearish divergence xauusd signal warns of a possible reversal in the xauusd trend from upward trend to downwards trend - this is because even though the gold price went higher the volume of buyers who pushed the gold price higher was less as shown by the MACD indicator. This signals underlying weakness of the upwards trend.
In the above example, if you as a trader had used divergence to trade you would have gotten good signals to enter or exit the trades at an optimal point. However, divergence xauusd signals just like other xauusd indicators, is also prone to whipsaws. That is why it's always good for xauusd traders using this xauusd setup to confirm the divergence xauusd signals with other indicators such as RSI, Stochastic Oscillator and Moving Averages.
An good xauusd indicator to combine divergence xauusd signal with is the moving average technical indicator, in this moving average trading indicator a trader should use the Moving Average Crossover System - Moving Average Crossover XAUUSD System and Divergence XAUUSD
Example of Moving Average Crossover XAUUSD Strategy
Once the divergence xauusd signal is given, a trader will then wait for the Moving average crossover xauusd system to give a xauusd signal in the same direction of the gold trading divergence signal, if there is a classic bullish divergence signal, a trader will wait for the moving average cross-over xauusd strategy to give an upward crossover xauusd trading signal, while for a bearish classic divergence xauusd signal the trader will wait for the Moving average crossover xauusd strategy to give a downward bearish crossover gold trading signal.
By combining the xauusd trading classic divergence signals with other technical xauusd indicators this way, a trader will be able to avoid xauusd whipsaws when it comes to trading the classic divergence gold trading signals, because the trader will wait until the xauusd trend has actually reversed and is already moving toward the direction of the divergence trade setup, hence the trader will not fall into the trap of picking market tops and market bottoms.
