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

Stock Indices Trading classic divergence pattern is used as a possible sign for a stock trend reversal. Classic divergence setup is used when looking for an area where price could reverse and start going in the opposite market 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 trade.

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

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

There are 2 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 Trade Bullish Divergence

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

Classic Stock Indices Trading Bullish Divergence - RSI Stock Indices Strategies

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

Classic Stock Indices Trade bearish divergence

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

Stock Indices Classic Bearish Divergence Stock Indices with RSI Indicator Strategies

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