Trade Forex Trading

RSI Classic Bullish Divergence & Classic Bearish Divergence Trade Setups

Traders in the foreign exchange market use the classic divergence pattern as a possible sign that a trend might change. The classic divergence trade setup is used when searching for a spot where the price of currencies might turn around and start moving in the opposite direction. Because of this, the classic divergence setup is used as a safe way to get into a trade and also as a precise way to get out of a trade.

  • Classic divergence is a low risk method to open a sell near the top or buy near the bottom of a trend, this makes the risk on your trade transactions are small in relation to potential reward.

  • Classic divergence setup is used to predict the optimum ideal point/level at which to exit a trade transaction

Two Kinds of Classic RSI Divergence Patterns Exist

  1. Classic Bullish Divergence Trading Setup
  2. Classic Bearish Divergence Trade Setup

Classic Forex Bullish Divergence

A normal bullish difference in forex happens when the price is making lower lows (LL), but the oscillator tool is making higher lows (HL).

Classic Forex Bullish Divergence - RSI Classic Bullish Divergence & RSI Classic Bearish Divergence

Classic Forex Bullish Divergence - RSI Strategies

Classic bullish forex divergence is a warning sign that the market might flip from a downtrend to an uptrend. Even if the price keeps dropping, if the selling volume drops too - like the RSI indicator shows - it usually means the downward trend is getting weak.

Classic Forex bearish divergence

Classic forex bearish divergence forms when price is making/forming a higher high (HH), but the oscillator technical indicator is lower high ( LH ).

Classic Bearish Divergence Trade with RSI - Classic Bullish Divergence vs Bearish Divergence RSI Trading

Classic Bearish Divergence Trade with RSI Strategies

A classic bearish divergence in forex signals a potential shift in the trend from an upward movement to a downward one. This happens because, although the price may continue to climb, the buying momentum driving the price higher diminishes, as reflected by indicators like the RSI. This highlights an underlying weakness in the upward trend.

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