RSI Stock Indices Classic Bullish Divergence & Stock Indices Classic Bearish Divergence Stock Indices Setups

Stock Indices Trading classic divergence is used as a possible sign for a stock indices trend reversal. Classic divergence setup is used when looking for an area where stock index price could reverse and start going in the opposite direction. For this reason stock indices trading classic divergence is used as a low risk entry method and also as an accurate way of exit out of a stock index trade.

• Classic divergence is a low risk method to sell near the top or buy near the bottom of a stock indices market trend, this makes the risk on your stock index trades are very small relative to the potential reward.

• Classic divergence is used to predict the optimum point at which to exit a stock indices trade

There are two different types of RSI Classic divergence trading setups:

1. Stock Indices Classic Bullish Divergence Setup
2. Stock Indices Classic Bearish Divergence Setup

Classic Stock Indices Trading Bullish Divergence

Classic stock indices bullish divergence occurs when price is making lower lows ( LL ), but the oscillator indicator is forming higher lows (HL).

Classic Stock Indices Trading Bullish Divergence - RSI Stock Indices Strategies

Classic bullish stock indices divergence warns of a possible change in the stock indices market stock indices trend from down to up. This is because even though the stock index price went lower the volume of sellers who pushed the stock index price lower was less as illustrated by the RSI indicator. This indicates underlying weakness of the downwards stock index trend.

Classic Stock Indices Trading bearish divergence

Classic stock indices bearish divergence occurs when price is making a higher high ( HH ), but the oscillator indicator is lower high (LH).

Stock Indices Classic Bearish Divergence Stock Indices with RSI Stock Indices Indicator Strategies

Classic stock indices bearish divergence warns of a possible change in the stock indices trend from up to down. This is because even though the stock index price went higher the volume of buyers that pushed the stock index price higher was less as illustrated by the RSI indicator. This indicates underlying weakness of the upwards trend.