Trading Stocks With Divergence on MT4 MT5 PDF Download
Divergence Stocks Setup is one of the trade setups used by Stocks traders. It involves looking at a stocks chart and one more stocks indicator. For our example we shall use the MACDstocks indicator.
To spot this stocks divergence setup find 2 chart points at which stocks price makes a new swing high or a new swing low but the MACD indicator doesn't, indicating a divergence between stocks price & momentum.
To look for divergence stocks setup we look for two chart points, two highs that form an M-shape on the stock trading chart or two lows that form a WShape on the stock trading chart. Then look for the same M-shape or W-Shape on the indicator you use to trade.
Example of a Stock Divergence Trade Setup:
In the stock chart below we spot 2 chart points, point A & point B (swing highs). These 2 chart points form an M-shape on the stocks price chart.
Then using MACD technical indicator we check the highs made by the MACD technical indicator, these are highs that are directly below Chart points A & B.
We then draw one line on the stock trading chart & another line on the MACD stocks technical trading technical indicator.
Drawing Stocks Divergence Stocks Lines
The stocks chart above shows example of one of the four types of stocks divergence setups, the one stocks divergence set up above is known as hidden bearish stocks divergence setup, one of the best type to trade. Types of stocks divergences are covered in the next learn stocks tutorial lesson.
How to spot stocks divergence setups
In order to spot Stock divergence trading signal we look for following:
- HH=Higher High- 2 highs but the last one is higher
- LH= Lower High- 2 highs but the last one is lower
- HL=Higher Low- 2 lows but the last one is higher
- LL= Lower Low- 2 lows but the last one is lower
First let us look at the illustrations of these stocks divergence trading terms:
M-shapes dealing with Stock price Highs
W Shapes dealing with Stocks price lows
Example of M Shapes on Stock Charts
Examples of W Shapes on Stocks Charts
Now that you have learned the stocks divergence trading terms that are used to explain divergence stocks set-up. Let us look at the two types of divergences and how to trade these stocks chart setups.
There two types are:
- Classic Divergence Stocks Setups
- Hidden Divergence Stocks Setups
These two setups are explained on the following guides below
Classic Divergence Stocks Setup
Hidden Divergence Stocks Setup
Trading Stocks With Divergence on MT4 MT5 PDF Download - Trading Stocks With Divergence on MT4 MT5 PDF Free Download - MT4 MT5 Divergence Stocks Tutorial.
