MACD Classic Bullish and MACD Bearish Divergence - MACD Classic Divergence PDF

MACD Classic divergence pattern is used as a possible sign for a trend reversal. MACD classic divergence is used when looking for an area where price could reverse and start going in the opposite trend direction. For this reason MACD classic divergence is used as a low risk entry method and also as an accurate way of exit out of a trade.

1. It is a low risk method to sell near the market top or buy near the market bottoms, this makes the risk on your trades are very small relative to the potential reward.

2. Classic divergence is used to predict the optimum point at which to exit a trade.

There are 2 types of Classic Divergence:

1. Classic Bullish Trading Divergence
2. Classic Bearish Divergence

Classic Bullish Divergence in Forex Trading

Classic bullish divergence in forex trading occurs when price is making lower lows (LL), but the oscillator technical indicator is making higher lows ( HL ).

MACD Classic Bullish Divergence in Forex Trading - MACD Divergence Strategy

Classic bullish divergence in forex warns of a possible change in the trend from down to up. This is because even though the price went lower the volume of sellers who pushed the price lower was less as shown by the MACD indicator. This demonstrates underlying weakness of the downward market trend.

Classic bearish divergence in Forex Trading

Classic bearish divergence in forex trading occurs when price is making a higher high (HH), but the oscillator technical indicator is lower high ( LH ).

MACD Classic Bearish Divergence in Forex Trading - MACD Divergence Strategy

Classic bearish divergence warns of a possible change in the market trend from up to down. This is because even though the price went higher the volume of buyers that pushed the price higher was less as shown by the MACD indicator. This indicates underlying weakness of the upward market trend.