What is the meaning of divergences in the context of cryptocurrency?

1 answers

• Mar 06, 2022 · 3 years ago
  Divergences in the context of cryptocurrency are an important aspect of technical analysis. They occur when the price of a cryptocurrency and an indicator, such as the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD), move in opposite directions. Divergences can provide valuable information about the strength of a trend and potential reversals. For example, a bullish divergence occurs when the price makes a lower low, but the indicator makes a higher low. This suggests that the selling pressure is weakening and a bullish reversal may occur. Conversely, a bearish divergence occurs when the price makes a higher high, but the indicator makes a lower high. This suggests that the buying pressure is weakening and a bearish reversal may occur. Traders often use divergences to confirm their trading signals and make more informed decisions in the cryptocurrency market.
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