Cryptocurrency Classic Divergence Explained PDF
bitcoin classic divergence is used as a possible signal for a Bitcoin trend reversal and is used by cryptocurrency traders to analyze bitcoin price movement and identify areas where the bitcoin price could reverse and start going in the opposite direction. Cryptocurrency classic divergence setup is used as a low risk entry method when opening a bitcoin trade or when exiting a bitcoin trade transaction.
Classic divergence bitcoin trading strategy is a low risk technique to sell near the btcusd trading market tops or buy near the btcusd trading market bottom, this makes the trading risk on your trades are to be small relative to potential reward. However, this classic divergence bitcoin strategy is one technique with very many whipsaws & most traders do not recommend using it.
Divergence in Bitcoin Trading is also used to predict the optimum point at which to exit an open bitcoin trade. If you already have an open bitcoin trade that is already profitable, a good method to identify a profit taking level would be to use the point where you spot this divergence bitcoin trading setup.
There are two different types of classic bitcoin divergence, based on the direction of the current Bitcoin trend:
- Crypto Trading Classic Bullish Divergence
- Bitcoin Classic Bearish Divergence
BTCUSD Divergence Scanner
Bitcoin classic bullish divergence forms when bitcoin price is forming lower lows (LL), but the bitcoin indicator is making higher lows (HL). The divergence bitcoin example illustrated below shows classic bitcoin divergence setup.
Bitcoin Trading Classic Bullish Divergence - Cryptocurrency Divergence Scanner - Bitcoin Classic Divergence Scanner
This cryptocurrency divergence example uses MACD indicator as a cryptocurrency trading divergence indicator.
From the above bitcoin divergence scanner example the bitcoin price made a lower low(LL) but the MACD indicator made a higher low(HL), this shows there is a divergence between the bitcoin price & the MACD indicator. This divergence bitcoin signal warns of a possible bitcoin trend reversal.
Classic bullish divergence cryptocurrency signal warns of a possible reversal in the bitcoin trend from downward trend to upward trend - because even though the bitcoin price went lower the volume of sellers that moved the bitcoin price lower was less as shown by the MACD technical indicator. This divergence bitcoin signal indicates underlying weakness of the downward cryptocurrency trend.
Bitcoin Divergence Scanner
Bitcoin classic bearish divergence forms when bitcoin price is forming a higher high (HH), but the bitcoin indicator is forming a lower high (LH). The bitcoin divergence scanner example illustrated below shows an example of the classic bearish cryptocurrency trading divergence setup.
Bitcoin Trading Classic Bearish Divergence - Cryptocurrency Divergence Scanner - Bitcoin Classic Divergence Scanner
This divergence scanner bitcoin example also uses MACD technical indicator
From the above example the bitcoin price made a higher high(HH) but the MACD indicator made a Lower High(LH), this shows there is divergence between the bitcoin price & the MACD indicator. This divergence bitcoin signal warns of a possible bitcoin trend reversal.
Classic bearish divergence bitcoin signal warns of a possible reversal in the bitcoin trend from upward trend to downward trend - this is because even though the bitcoin price went higher the volume of buyers who pushed the bitcoin price higher was less as shown by the MACD indicator. This signals underlying weakness of the upward cryptocurrency trend.
In the above examples, if as a trader you had used divergence trade setup to trade you would have gotten good signals to enter or exit the trades at an optimal point. However, divergence bitcoin trading signals just like other cryptocurrency indicators, is also prone to whipsaws. That is why it's always good for bitcoin traders using this cryptocurrency trading setup to confirm the divergence bitcoin trading signals with other indicators such as RSI, Stochastic Oscillator & Moving Averages.
An good bitcoin indicator to combine divergence cryptocurrency signal with is the moving average technical indicator, in this moving average indicator a trader should use the Moving Average Crossover System - Moving Average Crossover Bitcoin Trading System & Divergence Bitcoin Trading
Example of Moving Average Crossover Strategy
Once the divergence bitcoin signal is given, a trader will then wait for the Moving average crossover cryptocurrency trading system to give a cryptocurrency signal in the same direction of the bitcoin divergence signal, if there is a classic bullish divergence signal, a trader will wait for the moving average crossover bitcoin trading strategy to give an upward crossover bitcoin signal, while for a bearish classic divergence cryptocurrency signal the trader will wait for the Moving average crossover bitcoin trading strategy to give a downward bearish crossover bitcoin trading signal.
By combining the bitcoin classic divergence trading signals with other technical bitcoin indicators this way, a trader will be able to avoid bitcoin whipsaws when it comes to trading the classic divergence bitcoin signals, because the trader will wait until the bitcoin trend has actually reversed & is already heading toward the direction of the divergence trade setup, hence the trader will not fall into the trap of picking market tops & market bottoms.
