MACD Hidden Bullish and Bearish Divergence
MACD Hidden divergence is used as a possible sign for a trend continuation.
This setup occurs when price retraces to retest a previous high or low.
1. Hidden Bullish Divergence
2. Hidden Bearish Divergence
Hidden Bullish Divergence
Forms when price is making a higher low (HL), but the MACD oscillator is showing a lower low (LL).
Hidden bullish divergence occurs when there is a retracement in an uptrend.
MACD bullish divergence
This divergence confirms that a retracement move is complete. This divergence indicates underlying strength of an uptrend.
Hidden Bearish Divergence
Forms when price is making a lower high (LH), but the MACD oscillator is showing a higher high (HH).
Hidden bearish divergence occurs when there is a retracement in an uptrend.
MACD bearish divergence
This setup confirms that a retracement move is complete. This diverging indicates underlying strength of a downtrend.
NB: Hidden divergence is the best divergence to trade because it gives a signal that is in the same direction with the trend. It provides for the best possible entry and is more accurate than the classic type of diverging.