Stochastic Oscillator Bullish Oil Trading Divergence and Bearish Divergence Oil Trading

Divergence oil trading is one of the oil trading signals that can be generated when using the stochastic oscillator oil indicator.

Divergence oil trading is a signal that a rally or retracement is losing steam and is likely to reverse. It means that the last buyers or last sellers are pushing the crude oil price in one way while the majority of other oil traders have stopped trading in that direction and are cautious of a oil price correction or retracement.

There are 4 types of crude oil trading divergence trading setups

Example 1: Classic Crude Oil Trading Bullish Divergence

A Oil Classic Bullish Divergence in the stochastic oscillator indicator & the crude oil price is followed by a rise in crude oil price.

Stochastic Oscillator Oil Trading Indicator Classic Oil Bullish Divergence

When the crude oil price is making new lows the Stochastic indicator is not moving past its previous lows it is an indication that the downward oil trend is about to reverse and a bullish oil trading rally is likely to occur.

In the crude oil trading example above the crude oil price set a new low but it was not coupled with a new low in the measure of Stochastic oscillator oil indicator, when crude oil price formed a new low then the stochastic oil indicator should have followed suit, but the stochastic indicator did not therefore the oil trading classic divergence trading setup.

Oil Trading classic divergence trading setup is even stronger because there is combination of a divergence oil trade setup and then followed by a rise above the 20% indicator level. This combines the Over-bought and Oversold levels with this crude oil trading divergence trading setup.

Example 2: Classic Oil Bearish Divergence

A Classic Oil Trading Bearish Divergence trading setup in the stochastic oscillator crude oil technical indicator & the crude oil price is followed by a drop in crude oil price.

Stochastic Oscillator Oil Trading Indicator Classic Oil Bearish Divergence

When crude oil price is making new highs but the Stochastic oscillator oil indicator is not moving beyond its previous high it is an indication the upward oil trend will reverse and that a oil trading bearish divergence trade setup will follow.

This classic oil trading bearish divergence trade setup is even stronger because there is a combination of a crude oil trading divergence with a dip below the overbought 80 level.

Example 3: Hidden Crude Oil Trading Bullish Divergence

Hidden Oil Trading Bullish Divergence trade setup signifies a retracement in an upwards oil trend. This oil trading hidden divergence trading setup is the best type of crude oil divergence setup to trade, because you're not trading a oil price reversal, but you are trading within the direction of the Oil Trading trend.

Stochastic Oscillator Oil Indicator Hidden Oil Bullish Divergence

Even though, the stochastic oscillator oil indicator made a lower low the crude oil price low was higher than the previous low (higher low). This means that even though the oil sellers made a good attempt to push crude oil price down as indicated by the stochastic indicator, this was not reflected on the crude oil price, and the crude oil price did not make a new low. This is the best place to open a buy oil trade, since it is even in an upward oil trend there is no need to wait for a confirmation oil trading signal, because you are buying in an upward Oil Trading trend.

Example 4: Hidden Oil Bearish Divergence

Hidden Oil Trading Bearish Divergence trading setup signifies a retracement in a downward oil trend.

Stochastic Oscillator Oil Indicator Hidden Oil Bearish Divergence

Hidden oil trading bearish divergence crude oil setup is the best type of divergence to trade, because you're not trading a oil price oil trend reversal, but you are trading within the direction of the oil trend. This is the best place to open a sell oil trade, since it is even in a downward oil trend there is no need to wait for a confirmation oil trading signal, because you are selling in a downward Oil Trading trend.