Types of Divergence Forex - Types of Bearish Divergence - Types of Bullish Divergence
Types of Divergence Forex Definition - Divergence is a forex trading setup used by traders - divergence forex trading involves looking at a forex chart & a forex indicator - for example MACD indicator.
To find this divergence forex trading set up find two chart points which forex price makes a new swing high or a new swing low but the MACD indicator does not do the same, this trading signals a divergence between forex price & MACD technical indicator momentum.
For a divergence forex trading set up we look for two chart points, two highs that form an M shape on Forex trading chart or two lows that form a WShape on trading chart. Then look for same M shape or W Shape on Forex MACD indicator.
Example of a Divergence Forex Trading Trade Setup:
In the EURUSD forex chart below we identify 2 chart points, point A and point B (swing highs). These 2 chart points form an M shape on forex price chart.
Then using MACD indicator we check highs made by MACD indicator, these are highs that are direct below Chart points marked A & B.
We then draw one line on the Forex trading chart & another line on the MACD indicator.
Divergence Forex Trading Signals - Types of Divergence Forex Meaning and Definition
The forex chart above shows an example of hidden bearish divergence forex setup.
hat is Divergence Forex Trading Types of Divergence Forex
In order to trade divergence forex signal we look for following:
- HH : Higher High - 2 highs but the last one is higher
- LH : Lower High - two highs but the last one is lower
- HL : Higher Low - 2 lows but the last one is higher
- LL : Lower Low - two lows but the last one is lower
Divergence Forex Trading Terms Definition: Different Types of Divergence Forex Trading
M shapes on Forex charts dealing with price Highs
W Shapes on Forex Trading charts dealing with price lows
Example of M Shapes on Forex Charts - Bearish Divergence vs Bullish Divergence
Examples of W Shapes on Forex Charts - Bearish Divergence vs Bullish Divergence
Different Types of Divergence Forex Trading - Types of Bearish Divergence - Types of Bullish Divergence
