RSI Stock Indices Indicator Divergence Stock Indices Setups
Stock Indices Trading Divergence is one of the trade setups used by Stock Indices traders. It involves looking at a stock indices chart & one more stock indices technical indicator. For our example we shall use the RSI technical indicator.
To spot this stock indices divergence trading setup find 2 chart points at which stock index price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between stock index price & momentum.
RSI Stock Indices Divergence Example:
In the stock index chart below we identify two chart points, point A and point B (swing highs)
Then using RSI indicator we check the highs made by the stock indices RSI technical indicator, these are the highs that are directly below the stock indices Chart points A & B.
We then draw one line on the stock index chart & another line on the RSI technical indicator.
RSI Divergence Stock Indices Setup - Stock Indices Trading Divergence Stock Indices using RSI Technical Indicator
How to spot stock indices divergence
In order to spot this stock indices divergence setup we look for the following:
HH=Higher High- 2 highs but the last one is higher
LH= Lower High- two highs but the last one is lower
HL=Higher Low- 2 lows but the last one is higher
LL= Lower Low- two lows but the last one is lower
First let us look at the illustrations of these stock indices terms
Divergence Stock Indices Terms Definition
Stock Indices Trading Divergence Stock Indices Terms Definition Examples
There are two different types of stock indices divergence setups:
- Classic Stock Indices Trading Divergence
- Hidden Indices Trading Divergence
