What are some common trading signals generated by divergence in the crypto market?

3 answers

• May 08, 2022 · 3 years ago
  One common trading signal generated by divergence in the crypto market is the bullish divergence. This occurs when the price of a cryptocurrency makes a lower low, but the corresponding indicator makes a higher low. It suggests that the selling pressure is weakening, and a potential trend reversal or price increase may occur. Traders often use this signal to enter long positions or close short positions.
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• May 08, 2022 · 3 years ago
  Another example is the bearish divergence, which is the opposite of bullish divergence. It happens when the price makes a higher high, but the indicator makes a lower high. This indicates that the buying pressure is weakening, and a potential trend reversal or price decrease may happen. Traders may use this signal to enter short positions or close long positions.
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• May 08, 2022 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, also recognizes the importance of divergence as a trading signal. Traders can use divergence between the price and various indicators, such as the relative strength index (RSI) or moving averages, to identify potential trading opportunities. It's important to note that divergence signals should be used in conjunction with other technical analysis tools for confirmation and risk management.
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