Divergence Bitcoin Setups Summary - BTCUSD Bitcoin Divergence Strategy

Classic Bearish Divergence Setup - HH price, LH indicator - Indicates underlying weakness of a price trend - Warning of a possible change in the trend from up to down.

Classic Bullish BTCUSD Trade Divergence - LL price, HL indicator - Indicates underlying weakness of a price trend - Warning of a possible change in the trend from down to up.

Hidden Bearish Bitcoin Trade Divergence - LH price, HH indicator - Indicates under-lying power of a price trend - Mainly found during the corrective rallies in a downwards trend.

Hidden Bullish BTCUSD Trade Divergence - HL price, LL indicator - Indicates under-lying power of a price trend - Occurs mainly during the corrective declines in an up-ward trend.

Description and Illustration of The Divergence Trading Setup Terms:

M shapes dealing with Bitcoin Price highs

Divergence Bitcoin Setups Analysis - BTCUSD Bitcoin Divergence Trade Setups Tutorial

M-shapes: Divergence Terms

W-shapes dealing with price lows

Bitcoin Divergence Setups Summary - Learn Bitcoin Divergence Setups Examples Described

W-shapes: Divergence Terms

These are the shapes to look for - when using divergence trade setups.

One of the best indicators for using with this divergence setup is the MACD - as a divergence trading signal, MACD divergence setup is a high probability setup to enter a trade. But as with any signal there are certain parameters that have to be looked at to make this signal a high probability trade setup.

Getting straight in to a trade as soon as you see this setup is not the best strategy to use. This divergence setup should be used in combination with another technical indicator to confirm the direction of the BTCUSD price trend. A good system to combine this setup with is the moving average cross over trading method.

Be aware this setup on a smaller timeframe isn't so significant. When divergence is seen on a 15 minute price chart it might or may not be very crucial as when compared to the 4 H chart time frame or the 1 day time=frame.

If seen on a 60 minute trading chart, 4 H chart, or daily time-frame, then begin looking for other factors to show when the Bitcoin price may react to the divergence.

This brings us to a key point when using this divergence signal to enter a trade: on a higher timeframe MACD divergence setup signal can be a fairly reliable indicator of a change in the price direction. However, the big question is: WHEN? That is why getting straight in to a trade as soon as you see this divergence setup isn't always the best trade strategy.

Many Bitcoin traders get caught out by entering the market too soon when they see MACD divergence setup. In many cases, price has still got some momentum to continue in current market trend direction. The Bitcoin trader who has jumped in too soon can only stare at the screen in dismay as price shoots through his stoploss taking him out.

If you simply look for this divergence setup without any other considerations you'll not be aligning yourself with the best chance, so to increase the chance of making a successful trade you should also consider other factors, specifically signals from other indicators.

What other factors should you consider when using this divergence setup?

1. Support, Resistance and Fib levels on higher timeframes

Another way to greatly/significantly increase the chances of a successful trade is to look at and observe the higher time-frames before opening a trade order based on the lower time frame.

If you observe that the hourly, 4 hour or daily price chart has met a major resistance, support or Fibonacci level then the probability of a successful trade position based on the divergence setup on a lower timeframe at this point increases.

2. Reward:Risk Ratio: BTC USD Crypto Trade Capital Management Strategies

And finally, when looking for divergence trade setups, it's very important that you as a trader enter the trade correctly, so that as you as a trader have a good risk: reward ratio and only open trades which have more profit potential than what you are risking. If you understand how to enter a trade properly, you as a trader can measure your risk: reward ratio before you open a Bitcoin trade. That way, you as a trader can only choose to open orders that offer a favorable risk reward ratio.

Finally, when used correctly & combined with other indicators to confirm this divergence trading signal, divergence setup can offer a good trading method for trading BTC/USD Bitcoin Crypto.

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