Silver Trading Divergence Silver Trading SETUPS SUMMARY

Classic Bearish - HH xagusd price, LH indicator - Indicates underlying weakness of a silver trend - Warning of a possible change in the silver trend from up to down.

Classic Bullish - LL xagusd price, HL indicator - Indicates underlying weakness of a silver trend - Warning of a possible change in the silver trend from down to up.

Hidden Bearish - LH xagusd price, HH indicator - Indicates underlying strength of a silver trend - Mainly found during corrective rallies in a downward silver trend.

Hidden Bullish - HL xagusd price, LL indicator - Indicates underlying strength of a silver trend - Occurs mainly during corrective declines in an upward silver trend.

Illustrations of the divergence terms:

M-shapes dealing with XAGUSD price highs

M-shapes

W-shapes dealing with XAGUSD price lows

W-shapes

These are shapes to look for when using these silver trading setups.

One of the best indicator for this xagusd trading setup is the MACD Technical Indicator - as a silver signal MACD divergence is a setup to enter a trade. But as with any signal there are certain precautions that have to be observed to make this silver trading signal a setup. Getting straight in to a trade as soon as you see this xagusd setup isn't the best strategy. This setup should be used in combination with another technical indicator to confirm the direction of the silver trend. A good system to combine with is the moving average cross-over system.

Be aware this xagusd setup on a smaller timeframe is not so significant. When divergence is seen on a 15 min chart it might or might not be very important as compared to the 4 Hour chart time-frame on MT4 xagusd software.

If seen on a 60 minute chart, 4H chart, or daily chart time frame, then start looking for other factors to indicate when the xagusd price may react to the divergence.

This brings us to a key point when using this silver signal to enter a trade: on a higher time frame MACD divergence can be a fairly reliable indicator of a change in xagusd price direction. However, the big question is: WHEN? That is why getting straight in to a trade as soon as you see this xagusd trading set up is not always the best strategy.

Many investors get caught out by entering the xagusd trading market too soon when they see MACD divergence. In many cases, xagusd price has still got some momentum to continue in current direction. The investor who has jumped in too soon can only stare at the screen in dismay as xagusd price shoots through his stop loss taking him out.

If you simply look for this xagusd trading setup without any other considerations you will not be aligning yourself with the best odds, so to increase the odds of making a successful trade you should also look at other factors, specifically other indicators.

What other factors should you consider when using this Silver trading setup?

1. Support level, Resistance levels & XAGUSD Trading Fibonacci levels on higher XAGUSD Chart Time Frames

Another way to greatly increase the odds of a winning trade is to observe higher chart timeframes before opening an order based on the lower timeframes.

If you observe that the hourly, 4 hour or daily Silver chart has met a major resistance, support or Fib level then the probability of a successful trade based on divergence on a lower timeframe at this point increases.

2. Reward to Risk Ratio: XAGUSD Trading Money Management Rules

And finally, when looking for divergence, it is very important that you enter the trade correctly, so that you've a good risk/reward ratio and only open silver trades which have more profit potential than what you are risking. If you understand how to enter a transaction properly, you can measure your risk/reward before you open a transaction. That way, you can only select to open orders which offer a favorable ratio.

Finally, when used correctly & combined with other technical indicators to confirm this silver trading signal, divergence setup can provide for a huge profit potential.