How Do I Read Bitcoin Trading Divergence and Trade Divergence Setups in Bitcoin Trading?
Bitcoin Trade Bitcoin Trading Divergence and Trade Divergence Setups in Bitcoin Trading
Divergence Bitcoin Definition - Divergence bitcoin trading is one of the bitcoin trading setups used by Bitcoin traders. Divergence bitcoin trading involves looking at a cryptocurrency chart and one more cryptocurrency indicator. For our divergence cryptocurrency trading examples we shall use the MACD bitcoin technical trading indicator.
To spot this cryptocurrency trading divergence setup find two bitcoin chart points at which bitcoin trading price makes a new swing high or a new swing low but the MACD cryptocurrency indicator doesn't, indicating a cryptocurrency trading divergence between bitcoin trading price & momentum.
To look for divergence cryptocurrency signal we look for two chart points, 2 highs which form an M shape on the cryptocurrency chart or two lows that form a WShape on the crypto chart. Then look for the same M-shape or W-Shape on cryptocurrency indicator that you use to bitcoin trade - for example RSI cryptocurrency indicator, MACD cryptocurrency indicator or Stochastic Oscillator bitcoin technical technical indicator.
Example of a Cryptocurrency Divergence Trade Setup:
In the cryptocurrency chart below we spot two bitcoin chart points, point A and point B (swing highs). These two chart points form an M-shape on the bitcoin trading price chart.
Then using MACD cryptocurrency technical indicator we check the highs made by the MACD cryptocurrency technical indicator, these are highs that are directly below bitcoin Chart points A and B.
We then draw one line on the cryptocurrency chart and another line on the MACD bitcoin technical technical indicator.
Bitcoin Trading Divergence Strategy
The cryptocurrency chart above shows an example of one of the 4 types of cryptocurrency trading divergence setup, the one above is known as hidden bearish bitcoin divergence. Types of cryptocurrency trading divergence setups are covered in the next learn bitcoin trading lesson.
Trading Bitcoin spot divergence bitcoin trading setup
In order to spot Cryptocurrency divergence trading signal we look for the following:
- HH - Higher High - 2 highs but the last one is higher
- LH - Lower High - 2 highs but the last one is lower
- HL - Higher Low - 2 lows but the last one is higher
- LL - Lower Low - 2 lows but the last one is lower
First let us look at the illustrations of these divergence bitcoin trading terms:
M shapes on Crypto charts dealing with Bitcoin price Highs
W Shapes on Crypto charts dealing with Bitcoin price lows
Example of M Shapes on Crypto Charts
Examples of W Shapes on Cryptocurrency Charts
Now that you have learned the divergence bitcoin trading terms which are used to explain divergence bitcoin setup. Let us look at the 2 types of bitcoin trading divergences and how to bitcoin trade these cryptocurrency trading divergence chart setups.
The two bitcoin divergence types which are:
- Classic Bitcoin Divergence
- Hidden Bitcoin Divergence
These two cryptocurrency trading divergence setups - classic bitcoin divergence trading & hidden bitcoin divergence trading are explained on the learn bitcoin trading guides in the bitcoin lessons tutorials on this learn bitcoin trading website located at the navigation menu under the topics learn bitcoin trading lessons.
How Do I Analyze Bitcoin Trading Divergence and Trade Divergence Setups in Bitcoin Trading
