RSI Oil Indicator Divergence Oil Trading Setups
Oil Trading Divergence is one of the trade setups used by Oil traders. It involves looking at a oil chart and one more oil technical indicator. For our example we shall use the RSI technical indicator.
To spot this oil divergence trading setup find two oil chart points at which crude oil price makes a new swing high or a new swing low but the RSI indicator does not, indicating a divergence between crude oil price and momentum.
RSI Oil Trading Divergence Example:
In the crude oil chart below we spot two oil chart points, point A and point B (swing highs)
Then using RSI indicator we check the highs made by the oil RSI technical indicator, these are highs that are directly below the oil Chart points A and B.
We then draw one line on the crude oil chart & another line on the RSI technical indicator.
RSI Divergence Oil Setup - Oil Trading Divergence Oil using RSI Technical Indicator
How to spot oil divergence
In order to spot this oil 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 oil terms
Divergence Oil Terms Definition
Oil Trading Divergence Oil Terms Definition Examples
There are two types of oil divergence setups:
- Classic Oil Trading Divergence
- Hidden Crude Trading Divergence
