Bullish Oil Trading Divergence Setup

When it comes to bullish divergence there are two bullish divergence trading setups mainly traded in the crude oil market - these oil trading setups are; Crude Oil Trading Classic Bullish Divergence & Oil Hidden Bullish Divergence.

Oil Trading Classic Bullish Divergence

Classic bullish divergence set-up forms when crude oil price is making lower lows ( LL ), but the oscillator is making higher lows (HL). The example explained below shows a picture of this oil trading setup.

Oil Trading Classic Bullish Divergence - Bullish Divergence Oil Trading

This examples uses MACD indicator as a Oil Trading divergence indicator.

From the above bullish divergence example the crude oil price made a lower low(LL) but the indicator made a higher low(HL), this shows there is a divergence between the crude oil price and indicator. This signal warns of a possible oil trend reversal.

Classic bullish diverging trading signal warns of a possible change in oil trend from down to up. This is because even though the crude oil price went lower the volume of sellers who pushed the crude oil price lower was less as illustrated by the MACD technical indicator. This indicates underlying weakness of the downwards Oil Trading trend.

Crude Oil Hidden Bullish Divergence

This bullish divergence setup happens when crude oil price is making a higher low ( HL ), but the oscillator (indicator) is showing a lower low (LL). To remember them easily think of them as W-shapes on Chart patterns. It occurs when there is a retracement in an upward Oil Trading trend.

The bullish divergence example explained below shows an image of this oil setup, from the screenshot the crude oil price made a higher low (HL) but the indicator made a lower low (LL), this shows that there was a diverging signal between the crude oil price and indicator. This signal shows that soon the crude oil market up oil trend is going to resume. In other words it shows this was just a retracement in an upwards oil trend.

Oil Trading Hidden Bullish Divergence- Bullish Divergence Oil Trading

This bullish divergence confirms that a retracement move is complete and indicates underlying strength of an upward oil trend.