Bitcoin Trading Divergence BTCUSD Trading SETUPS SUMMARY
Crypto Classic Bearish Divergence - HH bitcoin trading price, LH indicator - Indicates underlying weakness of a bitcoin trend - Warning of a possible change in the bitcoin trend from up to down.
Crypto Trading Classic Bullish Divergence - LL bitcoin trading price, HL indicator - Indicates underlying weakness of a bitcoin trend - Warning of a possible change in the bitcoin trend from down to up.
Crypto Trading Hidden Bearish Divergence - LH bitcoin trading price, HH indicator - Indicates underlying strength of a bitcoin trend - Mainly found during corrective rallies in a downward cryptocurrency trend.
BTCUSD Trading Hidden Bullish Divergence - HL bitcoin trading price, LL indicator - Indicates underlying strength of a bitcoin trend - Occurs mainly during corrective declines in an upward cryptocurrency trend.
Divergence Forum - Illustrations of the divergence terms:
M-shapes dealing with Bitcoin price highs
M-shapes - Divergence Forum
W-shapes dealing with BTCUSD price lows
W-shapes - Divergence Forum
These are divergence shapes to look for when using these bitcoin trading setups.
One of the best cryptocurrency indicator for this cryptocurrency trading setup is the MACD Cryptocurrency Technical Indicator - as a cryptocurrency signal MACD divergence is a setup to enter a bitcoin trade. But as with any signal there are certain precautions that have to be observed to make this cryptocurrency trading signal a setup. Getting straight in to a trade as soon as you see this cryptocurrency trading setup is not the best strategy. This setup should be used in combination with another cryptocurrency indicator to confirm the direction of the cryptocurrency trend. A good system to combine with is the moving average cross-over system.
Be aware this cryptocurrency setup on a smaller timeframe isn't so significant. When divergence is seen on a 15 min chart it may or might not be very important as compared to the 4 H chart time-frame on MT4 software.
If divergence setup seen on a 60 minute chart, 4H chart, or daily chart time frame, then start looking for other factors to indicate when the bitcoin price might react to the divergence.
This brings us to a key point when using this divergence setup signal to enter a trade: on a higher time frame MACD divergence can be a fairly reliable indicator of a change in bitcoin trading price direction. However, the big question is: WHEN? That is why getting straight in to a trade as soon as you see this cryptocurrency trading setup isn't always the best strategy.
Many bitcoin traders get caught out by entering the btcusd trading market too soon when they see MACD divergence. In many cases, bitcoin trading price has still got some momentum to continue in the current direction. The investor who has jumped in too soon can only stare at the screen in dismay as bitcoin trading price shoots through his stoploss taking him out.
If you simply look for this divergence 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 cryptocurrency trading indicators.
What other factors should you consider when using this Bitcoin trading setup?
1. Support level, Resistance levels & BTCUSD Fib levels on higher BTCUSD Chart Time Frames
Another way to significantly increase the odds of a winning trade is to observe the higher chart time-frames before opening an order based on the lower timeframes.
If you observe that the hourly, 4 hour or daily Bitcoin chart has met a major resistance, support or Fibonacci level then the probability of a successful trade based on divergence on a lower timeframe at this point increases.
2. Reward to Risk Ratio: BTCUSD 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 bitcoin trades which have more profit potential than what you are risking. If you understand how to enter a trade 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 and combined with other indicators to confirm this bitcoin trading signal, divergence setup can provide for a huge profit potential.
