What is Stocks Trading Divergence?
What's Divergence Stocks Trading Definition? - Divergence is a stocks setup used by Stocks traders - stock trading divergence trading involves looking at a stocks chart & a stocks indicator - for example MACD indicator.
To find this stock trading divergence trading set up find two chart points which stocks price makes a new swing high or a new swing low but the MACD technical 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 two chart points, 2 highs which form an M shape on the stock trading chart or two lows that form a WShape on the stock chart. Then look for same M-shape or W-Shape on the Stocks Trading MACD indicator.
Example of a Stock Trading Divergence Trade Setup:
In the stocks 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 stocks trading MACD technical technical indicator we check the highs made by the MACD technical indicator, these are the 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 indicator.
Divergence Stocks Signals - What is Divergence Stocks Explanation? - What's Divergence Stocks Trading Definition?
The stocks chart above shows example of hidden bearish stocks trading divergence.
What's Divergence Stocks?
In order to trade Stocks Trading 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
Stocks Trading Divergence Stocks Terms Definition: What is Divergence Stocks? - What is Stocks Trading Divergence?
M shapes on Stock charts dealing with Stocks price Highs
W Shapes on Stock charts dealing with Stocks price lows
Example of M Shapes on Stock Charts - What is Bearish Divergence?
Examples of W Shapes on Stocks Charts - What is Bearish Divergence?
What's Divergence Stocks? - What is Stocks Divergence? - What is Bearish Stock Divergence? - What is Bullish Stock Divergence? - What's Divergence Stocks Explanation? - What's Divergence Stocks Trading Definition?
