Moving Average Convergence and Divergence MACD Classic Bullish and Bearish Divergence
Moving Average Convergence and Divergence MACD Classic divergence is used as a possible sign for a stocks trend reversal. Classic divergence is used when looking for an zone where stocks price could reverse & start going in opposite direction. For this reason classic divergence is used as a low risk entry technique & also as an accurate way of exit out of a trade.
1. It is a low risk technique to sell near the stocks market tops or buy near the stocks market bottoms, this makes the risk on your trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Stocks trade.
There are two types:
- Stocks Classic Bullish Divergence
- Stock Classic Bearish Divergence
Stocks Classic Bullish Divergence
Classic bullish divergence occurs when price is making lower lows ( LL ), but the oscillator technical trading indicator is making higher lows ( HL ).
Moving Average Convergence and Divergence MACD Stocks Classic Bullish Divergence
Classic bullish divergence warns of a possible change in 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 Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the downwards trend.
Classic bearish Stock Trading Divergence Setup
Classic bearish divergence occurs when price is making a higher high ( HH ), but the oscillator technical trading indicator is lower high ( LH ).
Moving Average Convergence and Divergence MACD Stocks Classic Bearish Divergence
Classic bearish divergence warns of a possible change in stocks trend from up to down. This is because even though the stocks price went higher the volume of buyers who pushed the stocks price higher was less as illustrated by the Moving Average Convergence and Divergence MACD indicator. This is an technical indicator of the underlying weakness of the upwards trend.
