RSI Commodities Indicator Divergence Commodity Trading Setups
Commodity Trading Divergence is one of the trade setups used by Commodities traders. It involves looking at a commodity chart and one more commodity technical indicator. For our example we shall use the RSI technical indicator.
To spot this commodity divergence trading setup find two commodity chart points at which commodities price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between commodities price & momentum.
RSI Commodity Trading Divergence Example:
In the commodities chart below we spot two commodity chart points, point A and point B (swing highs)
Then using RSI indicator we check the highs made by the commodity RSI technical indicator, these are highs that are directly below the commodity Chart points A and B.
We then draw one line on the commodities chart & another line on the RSI technical indicator.
RSI Divergence Commodity Setup - Commodity Trading Divergence Commodities using RSI Technical Indicator
How to spot commodity divergence
In order to spot this commodity divergence setup we look for the following:
HH=Higher High- two highs but the last one is higher
LH= Lower High- 2 highs but the last one is lower
HL=Higher Low- two lows but the last one is higher
LL= Lower Low- 2 lows but the last one is lower
First let us look at the illustrations of these commodity terms
Divergence Commodities Terms Definition
Commodity Trading Divergence Commodities Terms Definition Examples
There are two different types of commodity divergence setups:
- Classic Commodity Trading Divergence
- Hidden Commodities Trading Divergence
