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 trade transactions are small relative to 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:
- Classic Bullish Trading Divergence
- 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 downwards to upward. This is because though the price moved lower the volume of sellers that moved price lower was less as shown by 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 signals a possible shift in the market trend from upwards to downward. This is because though the price moved higher the volume of buyers that moved price higher was less as shown by MACD indicator. This indicates underlying weakness of the upwards market trend.
