EUR/USD 1 day Bullish Divergence Swing Trade 2 of 4
(Continued from 1 of 4)
In the GOLD (US$/oz) 4 hr chart, we get further confirmation that the bullish divergence in this time frame has already occurred and momentum favors the bulls. Within the support and resistance channel, we see a higher low has occurred and hit a new level of support indicated by the direction of the price to the upside after hitting that level. As I mentioned before, the fast EMA(12) is due to attract back to the slower moving EMA(26) by moving in the upward direction. We get confirmation from the MACD histogram that the direction of momentum has already shifted towards positive from the higher low that was formed by the reduction of the negative momentum and with the signal and indicator crossed at an extremely low level. Since there is no bound to the MACD levels, we need to get further confirmation from the RSI and Stock RSI, as done previously. The RSI confirms that there was already a shift in selling to buying momentum from the previous lower lows to the current higher low; the bears have overwhelmed the selling pressure. Unfortunately, the Stoch RSI doesn't give us much in that it is about equal in selling and buying pressure.
In the GOLD (US$/oz) 4 hr chart, we get further confirmation that the bullish divergence in this time frame has already occurred and momentum favors the bulls. Within the support and resistance channel, we see a higher low has occurred and hit a new level of support indicated by the direction of the price to the upside after hitting that level. As I mentioned before, the fast EMA(12) is due to attract back to the slower moving EMA(26) by moving in the upward direction. We get confirmation from the MACD histogram that the direction of momentum has already shifted towards positive from the higher low that was formed by the reduction of the negative momentum and with the signal and indicator crossed at an extremely low level. Since there is no bound to the MACD levels, we need to get further confirmation from the RSI and Stock RSI, as done previously. The RSI confirms that there was already a shift in selling to buying momentum from the previous lower lows to the current higher low; the bears have overwhelmed the selling pressure. Unfortunately, the Stoch RSI doesn't give us much in that it is about equal in selling and buying pressure.
Comment:
Since the price broke through the previous support, it may continue to go down until a reversal occurs or it may go above. Until the EMA12 goes above the EMA26, the trend will still be bearish.