RSI Classic Bullish Divergence and Classic Bearish Divergence Trade Setups

Forex classic divergence pattern is used by traders as a possible sign for a trend reversal. Classic divergence setup is used when looking for an area where forex price could reverse and begin going in the opposite market 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 trade.

• Classic divergence is a low risk method to sell near the top or buy near the bottom of a market trend, this makes the risk on your trades are very small relative to the potential reward.

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

There are 2 types of RSI Classic divergence setups:

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

Classic Forex Bullish Divergence

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

Classic Forex Bullish Divergence - RSI Strategies

Classic bullish forex divergence warns of a possible change in the market 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 illustrated by the RSI indicator. This indicates underlying weakness of the downward forex trend.

Classic Forex bearish divergence

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

Classic Bearish Divergence Trading with RSI Indicator 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.