Stochastic Oscillator Bullish Trade Divergence and Bearish Divergence CFD

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

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

There are 4 types of divergence trading setups

Example 1: Classic Trade Bullish Divergence

A CFD Classic Bullish Divergence in the stochastic indicator and the price is followed by a rise in price.

Stochastic Oscillator Indicator Classic CFD Bullish Divergence

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

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

CFD Trading classic divergence trading setup is even stronger because there is combination of a divergence trade setup and then followed by a rise above the 20% indicator level. This combines the Overbought and Oversold levels with this cfds trade divergence setup.

Example 2: Classic Trade Bearish Divergence

A Classic CFD Bearish Divergence trading setup in the stochastic oscillator indicator and the price is followed by a drop in price.

Stochastic Oscillator Indicator Classic CFD Trading Bearish Divergence

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

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

Example 3: Hidden Trade Bullish Divergence

Hidden CFD Trading Bullish Divergence trade setup signifies a retracement in an up-ward cfds trend. This cfd hidden divergence trading setup is the best type of divergence setup to trade, because you aren't trading a price reversal, but you are trading within the direction of the trend.

Stochastic Oscillator Indicator Hidden CFD Bullish Divergence

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

Example 4: Hidden Trade Bearish Divergence

Hidden CFD Bearish Divergence trading setup signifies a retracement in a downward cfds trend.

Stochastic Oscillator Indicator Hidden CFD Trading Bearish Divergence

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