How to Analyze XAUUSD Classic Bullish Divergence Technical Analysis & Bearish Divergence
Classic divergence is used as a signal for a possible xauusd trend reversal and classic trading divergence is used by traders when they are looking for an area where gold price could reverse and start moving in the opposite direction. For this reason xauusd traders Analyze this classic divergence signal as a low risk xauusd entry technique & as an accurate way of exiting out of a gold trade.
This classic divergence trading strategy is a low risk technique to sell near the xauusd market top or buy near the xauusd market bottoms, this makes the risk on your gold trades small relative to the potential reward. However, this is classic divergence strategy is one technique with very many xauusd trading whipsaws & most traders don't recommend using this strategy.
Classic Divergence in XAUUSD is also used to predict the optimum level at which to exit a xauusd trade. If you already have an open xauusd trade that is already profitable, a good way to identify a profit taking level would be the area where you spot this classic trading divergence setup.
There are two types of classic trading divergence setup - based on the direction of the trend:
- Classic Bullish XAUUSD Trading Divergence
- Classic Bearish XAUUSD Trading Divergence
Classic Gold Trading Bullish Divergence
XAUUSD Trading classic bullish divergence setup occurs when price is making lower lows - LL, but the technical indicator is making higher lows - HL. The classic divergence examples illustrated below explains this xauusd setup.
Classic Bullish XAUUSD Trading Divergence
This classic divergence example uses MACD indicator as a gold trading divergence indicator.
From the above classic divergence examples - the gold price made a lower low - LL but the technical indicator made a higher low - HL, this shows there is a divergence trading signal between the gold price & the technical indicator. This classic divergence trading signal warns of a possible xauusd trend reversal.
Classic bullish divergence signal warns of a possible reversal in the xauusd trend from downwards trend to upward trend. This is because even though the gold price went lower the volume of sellers that moved the gold price lower was less as is shown by the MACD indicator. This signals the underlying weakness of the gold trading downward trend.
XAUUSD Classic Bearish Divergence Technical Analysis
Classic bearish divergence xauusd setup occurs when price is making a higher high - HH, but the indicator is making a lower high - LH. Classic bearish divergence xauusd example shown below explains this xauusd setup.
Analyze XAUUSD Classic Bullish Divergence Technical Analysis & XAUUSD Classic Bearish Divergence Technical Analysis
This classic bearish gold divergence trading set up example also uses MACD gold trading technical indicator
From the above example the gold price made a higher high - HH but the technical indicator made a Lower High - LH, this shows there is a divergence signal between the gold price & the xauusd indicator. This classic xauusd trading bearish divergence trading signal warns of a possible xauusd trend reversal.
Classic bearish divergence signal warns of a possible change in the xauusd trend from upward trend to downwards trend. This is because even though the gold price went higher the volume of buyers that moved the gold price higher was less as illustrated by the MACD indicator. This classic bearish divergence signal shows underlying weakness of the upwards trend.
In the above examples, if you as a trader had used divergence xauusd strategy to trade you would have generated good xauusd signals to enter or exit the gold trades at optimal points. However, gold divergence signals just like other xauusd indicators, is also prone to xauusd trading whipsaws - that is why it's always good to confirm the divergence xauusd signals with other technical xauusd indicators such as a Moving Averages and RSI gold trading technical indicators.
Analyze XAUUSD Classic Bullish Divergence Technical Analysis & XAUUSD Classic Bearish Divergence Technical Analysis in XAUUSD
