How does MACD divergence signal potential trend reversals in Bitcoin?

1 answers

• Apr 30, 2022 · 3 years ago
  MACD divergence is a key indicator used by traders to identify potential trend reversals in Bitcoin. It works by comparing the MACD line and the price of Bitcoin. When the MACD line and the price of Bitcoin diverge, it suggests that the current trend may be losing strength and a reversal could be on the horizon. Traders use MACD divergence to spot potential trend reversals and make informed trading decisions. A bearish divergence occurs when the price of Bitcoin is making higher highs, but the MACD line is making lower highs. This indicates that the upward momentum is weakening and a trend reversal to the downside may occur. Conversely, a bullish divergence occurs when the price of Bitcoin is making lower lows, but the MACD line is making higher lows. This suggests that the downward momentum is weakening and a trend reversal to the upside may be imminent. It's important to note that MACD divergence should not be used in isolation and should be used in conjunction with other technical indicators to confirm potential trend reversals.
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