Spotting Divergence Trader Strategies

Divergence Trader Strategies is one of the trade setups used by XAUUSD traders. It involves looking at a xauusd chart and one more xauusd indicator. For our examples we shall use the MACD technical indicator.

To spot this divergence trader strategies find two chart points at which gold trading price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between gold price & momentum.

To look for Divergence trader strategies we look for two chart points, two highs that form an M-shape on the XAUUSD Trading chart or two lows that form a WShape on the XAUUSD Trading chart. Then look for the same M-shape or W-Shape on the XAUUSD indicator you use to trade.

Example of a XAUUSD Divergence Trade Strategies:

In the XAUUSD Trading chart below we identify 2 chart points, point A and point B (swing highs). These 2 points form an M-shape on the gold trading price chart.

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

We then draw one line on the XAUUSD chart & another line on the MACD technical indicator.

Drawing Divergence XAUUSD Lines - Divergence trader strategies

The XAUUSD chart above shows example of one of the 4 types of divergence trader strategies, the one above is known as hidden bearish divergence strategy, one of the best type to trade.

How to spot divergence trader strategies

In order to spot XAUUSD Trading Divergence trader strategies we look for the following:

• HH=Higher High- 2 highs but the last one is higher
• LH= Lower High- 2 highs but the last one is lower
• HL=Higher Low- 2 lows but the last one is higher
• LL= Lower Low- 2 lows but the last one is lower

First let us look at the illustrations of these divergence set up trading terms:

M-shapes dealing with XAUUSD price Highs

Divergence trader strategies

W Shapes dealing with Gold price lows

Divergence trader strategies

Example of M Shapes

Divergence trader strategies

Examples of W Shapes

Divergence trader strategies

Now that you have learned the Divergence trader strategies terms which are used to explain set-up. Let us look at the 2 types of XAUUSD Trading divergences & how to trade these divergence trader strategies setups.

There two types are:

1. Classic divergence trader strategies

2. Hidden divergence trader strategies

These 2 setups are the most oftenly used divergence trader strategies & these are described on the xauusd strategies section of this website.