Types of Divergence Stocks Trading

Types of Divergence Stocks Trading Definition - Divergence is a stocks setup used by Stocks traders - divergence stocks involves looking at a stocks chart and a stocks indicator - for example MACD indicator.

To find this divergence stocks setup find 2 chart points which stocks price makes a new swing high or a new swing low but the MACD indicator does not do the same, this stocks signals a divergence between stocks price & MACD technical indicator momentum.

For a divergence stocks setup we look for 2 chart points, two highs which form an M shape on the stock trading chart or two lows that form a W-Shape on the stock trading chart. Then look for same M-shape or W Shape on the Stocks MACD technical indicator.

Example of a Divergence Stock Trade Setup:

In the stocks chart below we spot 2 chart points, point A and point B (swing highs). These 2 chart points form an M-shape on the stocks price chart.

Then using stocks trading MACD technical indicator we check the highs made by the MACD technical indicator, these are highs that are direct below Chart points marked A and B.

We then draw one line on the stock trading chart & another line on the MACD technical indicator.

Divergence Stocks Signals - Types of Divergence Stocks Explanation - Types of Divergence Stocks Trading Definition

The stocks chart above shows example of hidden bearish divergence stocks trading setup.

hat is Divergence Stocks Types of Divergence Stocks

In order to trade divergence stocks trading signal we look for the following:

• HH : Higher High - two highs but the last one is higher
• LH : Lower High - 2 highs but the last one is lower
• HL : Higher Low - two lows but the last one is higher
• LL : Lower Low - 2 lows but the last one is lower

Divergence Stocks Terms Definition: Different Types of Divergence Stock - Types of Divergence Stocks

M shapes on Stocks charts dealing with Stock price Highs

W Shapes on Stocks charts dealing with Stock price lows

Example of M Shapes on Stock Charts - Types of Bearish Divergence Stocks

Examples of W Shapes on Stock Charts - Types of Bearish Divergence Stocks

Different Types of Divergence Stock - Types of Divergence Stocks Trading - Types of Bearish Divergence Stock - Types of Bullish Divergence Stock - Types of Divergence Stocks Explanation - Types of Divergence Stocks Trading Definition