Stochastic Oscillator Bullish Commodity Trading Divergence and Bearish Divergence Commodities

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

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

There are four types of commodity divergence trading setups

Example 1: Classic Commodity Trading Bullish Divergence

A Commodity Trading Classic Bullish Divergence in the stochastic oscillator indicator and the commodities price is followed by a rise in commodity price.

Stochastic Oscillator Commodities Trading Indicator Classic Commodity Trading Bullish Divergence

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

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

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

Example 2: Classic Commodity Trading Bearish Divergence

A Classic Commodity Trading Bearish Divergence trading setup in the stochastic oscillator commodity indicator and the commodities price is followed by a drop in commodity price.

Stochastic Oscillator Commodities Technical Indicator Classic Commodity Trading Bearish Divergence

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

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

Example 3: Hidden Commodity Trading Bullish Divergence

Hidden Commodity Trading Bullish Divergence trade setup signifies a retracement in an upward commodities trend. This commodity hidden divergence trading setup is the best type of commodity divergence setup to trade, because you are not trading a commodity price reversal, but you are trading within the direction of the Commodities trend.

Stochastic Oscillator Commodities Trading Indicator Hidden Commodity Trading Bullish Divergence

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

Example 4: Hidden Commodity Trading Bearish Divergence

Hidden Commodity Trading Bearish Divergence trading setup signifies a retracement in a downward commodities trend.

Stochastic Oscillator Commodities Technical Indicator Hidden Commodity Trading Bearish Divergence

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