MACD Stocks Trading Classic Bullish and Bearish Divergence
MACD Stocks Trading Classic divergence is used as a possible sign for a stocks trend reversal. MACD classic divergence is used when looking for an area where stocks price could reverse and start going in the opposite stocks trend direction. For this reason MACD classic divergence is used as a low risk entry method and also as an accurate way of exit out of a stocks trade.
1. It is a low risk method to sell near the stocks market top or buy near the stocks market bottom, this makes the risk on your stock trades are very small relative to the potential reward.
2. It is used to predict the optimum point at which to exit a Stocks trade.
There are two different types of Stocks Trading Classic Divergence:
- Stocks Classic Bullish Divergence
- Stock Classic Bearish Divergence
Stocks Classic Bullish Divergence in Stocks
Classic bullish divergence in stocks occurs when price is making lower lows ( LL ), but the oscillator technical trading indicator is making higher lows ( HL ).
MACD Stocks Classic Bullish Divergence in Stock - MACD Divergence Stocks Strategy
Classic bullish divergence in stocks warns of a possible change in the stocks trend from down to up. This is because even though the stocks price went lower the volume of sellers that pushed the stocks price lower was less as illustrated by the MACD stocks indicator. This indicates underlying weakness of the downward stock trend.
Classic bearish divergence in Stocks
Classic bearish divergence in stocks occurs when price is making a higher high ( HH ), but the oscillator technical trading indicator is lower high ( LH ).
MACD Stocks Classic Bearish Divergence in Stock - MACD Divergence Stocks Strategy
Classic bearish divergence warns of a possible change in the stocks market stocks trend from up to down. This is because even though the stocks price went higher the volume of buyers that pushed the stocks price higher was less as illustrated by the MACD stocks indicator. This indicates underlying weakness of the upward trend.
