MACD Commodity Trading Classic Bullish and Bearish Divergence

MACD Commodity Trading Classic divergence pattern is used by traders as a possible sign for a commodity trend reversal. MACD classic divergence is used when looking for an area where commodities trading price could reverse and start going in the opposite 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 trade.

1. It's a low risk technique to sell near the market tops or buy near the market bottom, this makes the risk on your commodities trades are very small relative to the potential reward.

2. It's used to predict the optimum zone at which to exit a trade.

There are 2 different types of Commodity Trading Classic Divergence:

1. Commodities Trading Classic Bullish Divergence
2. Commodity Trading Classic Bearish Divergence

Commodity Trading Classic Bullish Divergence in Commodities

Classic bullish divergence in commodity occurs when commodities price is forming lower lows ( LL ), but the oscillator is forming higher lows (HL).

MACD Commodity Trading Classic Bullish Divergence in Commodities Trading - MACD Divergence Strategy

Classic bullish divergence in commodity warns of a possible change in the trend from down to up. This is because even though the commodities trading price went lower the volume of sellers who pushed the commodities trading price lower was less as portrayed by the MACD indicator. This shows underlying weakness of the downward commodities trend.

Classic bearish divergence in Commodities

Classic bearish divergence in commodity occurs when commodities price is showing a higher high ( HH ), but the oscillator is lower high (LH).

MACD Trade Classic Bearish Divergence in Commodities Trading - MACD Divergence Strategy

Classic bearish divergence warns of a possible change in market trend from up to down. This is because even though the commodities trading price went higher the volume of buyers who pushed the commodities trading price higher was less as portrayed by the MACD indicator. This indicates underlying weakness of the upward commodities trend.