Divergence Technical Analysis in Bitcoin Trading
Divergence technical analysis set-up is one of the bitcoin signals that can be generated when using the divergence technical analysis stochastic oscillator.
Divergence on stochastic indicator is a signal that a rally or retracement is losing steam & is likely to reverse. It means that the last buyers or the last sellers are pushing the bitcoin trading price in one way while the majority of other bitcoin traders have stopped trading in that way & are cautious of a bitcoin trading price correction or retracement.
There are 4 types of divergences which can be traded using divergence technical analysis.
Example 1: BTCUSD Classic Bullish Divergence
A Bullish Divergence in the stochastic indicator & the bitcoin trading price is followed by a rise in bitcoin trading price.
stochastic divergence technical analysis
When the bitcoin trading price is making new lows the stochastic divergence technical analysis is not moving past its previous lows it is an indication that the down bitcoin trend is about to reverse and a bullish rally is likely to occur.
In the cryptocurrency trading example above stochastic divergence technical analysis setup the bitcoin trading price set a new low but it was not coupled with a new low in the measure of Stochastic oscillator, when bitcoin trading price formed a new low then the indicator should have followed suit, but the stochastic indicator did not therefore the stochastic divergence technical analysis setup.
This stochastic divergence technical analysis setup is even stronger because there is combination of a divergence & then followed by a rise above the 20% level. This combines the Overbought and Oversold levels.
Example 2: Bitcoin Classic Bearish Divergence
A Bearish Divergence in the stochastic technical indicator & the bitcoin trading price is followed by a drop in bitcoin trading price.
stochastic divergence technical analysis
When bitcoin trading price is making new highs but the stochastic divergence technical analysis is not moving beyond its previous high it is an indication the up bitcoin trend will reverse and that a bearish divergence will follow.
This stochastic divergence technical analysis setup is even stronger because there is a combination of a divergence trading signal with a dip below the over bought 80 level.
Example 3: BTCUSD Trading Hidden Bullish Divergence
This stochastic divergence technical analysis setup signifies a retracement in an upward trend. This is the best type of divergence to trade, because you are not trading a bitcoin trading price bitcoin trend reversal, but you are trading within the direction of the Bitcoin market trend.
stochastic technical indicator divergence technical analysis
Even though, the stochastic oscillator in this stochastic divergence technical analysis setup made a lower low the bitcoin trading price low was higher than the previous low (higher low). This means that even though the sellers made a good attempt to push bitcoin trading price down as indicated by the stochastic divergence technical analysis, this was not reflected on the bitcoin trading price, and the bitcoin trading price did not make a new low. This is the best place to buy bitcoin crypto, since it is even in an upward bitcoin trend there is no need to wait for a confirmation signal, because you are buying in an upward Bitcoin trend.
Example 4: Bitcoin Hidden Bearish Divergence
This setup signifies a retracement in a downward trend.
stochastic technical indicator divergence technical analysis
This is the best type of divergence to trade with this stochastic divergence technical analysis setup, because you're not trading a bitcoin trading price bitcoin trend reversal, but you are trading within the direction of the cryptocurrency trend. This is the best place to sell bitcoin crypto, since it is even in a down bitcoin trend there is no need to wait for a confirmation signal, because you're selling in a downward trend.
