RSI Forex Classic Bullish Divergence and Classic Bearish Divergence Trading Setups
Forex classic divergence is used as a possible sign for a forex trend reversal. Classic forex divergence trading setup is used when looking for an area where forex price could reverse and start going in the opposite direction. For this reason forex classic divergence is used as a low risk entry method and also as an accurate way of exit out of a forex trade.
- Classic forex divergence is a low risk method to sell near the top or buy near the bottom of a forex market trend, this makes the risk on your trades are very small relative to the potential reward.
- Classic forex divergence is used to predict the optimum point at which to exit a forex trade
There are two types of RSI Classic forex divergence trading setups:
- Classic Bullish Divergence Setup
- Classic Bearish Divergence Setup
Classic Forex Bullish Divergence
Classic forex bullish divergence occurs when price is making lower lows (LL), but the oscillator is making higher lows (HL).
Classic Forex Bullish Divergence - RSI Forex Trading Strategies
Classic bullish forex divergence warns of a possible change in the forex market trend from down to up. This is because even though the price went lower the volume of sellers that pushed the price lower was less as illustrated by the RSI indicator. This indicates underlying weakness of the downward trend.
Classic Forex bearish divergence
Classic forex bearish divergence occurs when price is making a higher high (HH), but the oscillator is lower high (LH).
Classic Bearish Divergence Trading with RSI Indicator Forex Strategies
Classic forex bearish divergence warns of a possible change in the 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 illustrated by the RSI indicator. This indicates underlying weakness of the upward trend.