Divergence BTCUSD Setups

Divergence Trading Setup is one way Bitcoin traders make trades. It involves looking at a crypto chart and another indicator. We will use the MACD indicator in our examples.

To find this setup, look for two spots on the chart where the bitcoin price makes a new high or low, but the MACD indicator doesn't, which means the price and momentum are moving in different directions.

To look for divergence we search for two points, 2 highs that form an M-shape on the Crypto chart or 2 lows that form a W Shape on the Bitcoin chart. Then look for the same M-shape or W-Shape on the Bitcoin indicator you use to trade.

Example of a Divergence Trading Setup:

On the cryptocurrency chart here, we can see 2 chart points, point A and point B (swing highs). These 2 points make an M shape on the bitcoin chart.

Subsequently, by utilizing the MACD indicator, we examine the peaks formed by the indicator: these peaks are located directly beneath points A and B on the chart.

We then plot one line on the Crypto chart and another line on the MACD indicator.

Cryptocurrency Divergence Trade Example on MACD Indicator - What is BTC/USD Divergence Trading?

Drawing Divergence BTCUSD Lines

The chart presented above illustrates one of four recognized divergence types: this specific example is known as hidden bearish divergence, considered one of the most advantageous types for trading. The subsequent lesson will elaborate on divergence types.

How to spot divergence

In order to spot & identify divergence signal we check for the following:

HH=Higher High- 2 highs but the last one is higher
LH = Lower High : two highs but last is lower
HL = Higher Low - 2 lows but last is higher
LL = Lower Low - two lows but the last is lower

First let us look at the exemplifications of these trading terms:

M-shapes dealing with BTCUSD Crypto price Highs

Higher High Higher Low Divergence Trading

W-Shapes dealing with BTCUSD price lows

Higher Low Lower Low Divergence Bitcoin Trading - Divergence Strategy Explained

Explanation of M-Shapes

M shapes on BTCUSD Chart - BTCUSD Divergence Trade Strategy Course Explained - Divergence Trader Strategy

Examples of W Shapes

W shapes on a Bitcoin Chart - Divergence Strategy Example Explained - How to Interpret/Analyze Trade Divergence Example

Now that you have grasped the divergence terminology used to describe setups, let us examine the two types of divergences and how to trade these chart setups.

There two types are:

Classic Bitcoin Trade Divergence
Hidden BTC USD Trading Divergence

These 2 setups are explained on the following tutorials below

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