How do divergences impact cryptocurrency trading?

1 answers

• Mar 08, 2022 · 3 years ago
  Divergences can have a significant impact on cryptocurrency trading. When there is a divergence between the price of a cryptocurrency and a technical indicator, it can provide valuable insights into market dynamics. Traders can use divergences to identify potential trend reversals or continuations, as well as to confirm or invalidate existing trading signals. For example, if the price of a cryptocurrency is making higher highs, but the indicator is making lower highs, it could indicate a bearish divergence and suggest that a price decline may be imminent. Conversely, if the price is making lower lows, but the indicator is making higher lows, it could indicate a bullish divergence and suggest that a price increase may be on the horizon. Traders who are able to effectively analyze and interpret divergences can gain an edge in the cryptocurrency market.
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