RSI Indices Classic Bullish Divergence and Classic Bearish Divergence Setups

Index classic divergence is used as a possible sign for a trend reversal. Classic divergence trading pattern is used when looking for an area where the price could reverse & begin going in the opposite market direction. For this reason forex classic divergence is used as a low risk entry method/technique & also as an accurate way to exit of a trade.

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

• Classic divergence setup is used to predict the optimum ideal level 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 Indices Bullish Divergence

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

Classic Indices Bullish Divergence - RSI Strategies

Classic bullish divergence signals a possible reversal in the market trend from downward to upward. This is because even though price moved & headed higher lower the volume of sellers that moved price lower was less such as shown by the RSI technical indicator. This reflects underlying weakness of the downwards trend.

Classic Indices Bearish Divergence

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

Classic Bearish Divergence Trade with RSI Trading Indicator Index Strategies

Classic Indices bearish divergence warns of a possible change in the trend from upward to downward. This is because even though the price headed higher the volume of buyers that moved price higher was less just as is shown by the RSI indicator. This indicates underlying weakness of the upwards trend.

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