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MACD Stock Classic Bullish and Bearish Divergence

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


1. It is a low risk method to sell near the stocks trading market top or buy near the stocks trading market bottom, this makes the risk on your stocks trades are very small relative to the potential reward.

2. It is used to predict the optimum point at which to exit a Stock trade.


There are two different types of Stock Classic Divergence:


  1. Stock Trading Classic Bullish Divergence

  2. Stock Trading Classic Bearish Divergence


Stock Trading Classic Bullish Divergence in Stock Trading

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

MACD Divergence Stock Trading Strategy

MACD Stock Trading Classic Bullish Divergence in Stock Trading - MACD Divergence Stock Trading Strategy



Classic bullish divergence in stock trading warns of a possible change in the stock 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 stock indicator. This indicates underlying weakness of the downward stocks trend.


Classic bearish divergence in Stock Trading

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

MACD Divergence Stock Trading Strategy

MACD Stock Trading Classic Bearish Divergence in Stock Trading - MACD Divergence Stock Trading Strategy


Classic bearish divergence warns of a possible change in the stocks trading market stock 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 stock indicator. This indicates underlying weakness of the upward stocks trend.

 

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