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