Bullish Stock Trading Divergence Setup

When it comes to bullish divergence there are two bullish divergence trading setups mainly traded in the stocks market - these stocks setups are; Stocks Classic Bullish Divergence and Stocks Hidden Bullish Divergence.

Stock Classic Bullish Divergence

Classic bullish divergence setup forms when price is making lower lows ( LL ), but the oscillator is making higher lows (HL). The example illustrated and explained below shows a picture of this stocks trading setup.

Stocks Classic Bullish Divergence - Bullish Divergence Stocks

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

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

Classic bullish diverging signal warns of a possible change in the stocks trend from down to up. This is because even though the stocks price went lower the volume of sellers that pushed the stocks price lower was less as illustrated by the MACD technical indicator. This indicates underlying weakness of the downward stock trend.

Stocks Hidden Bullish Divergence

This bullish divergence setup happens when 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 stock trend.

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

Stock Hidden Bullish Divergence- Bullish Divergence Stocks

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