BTC: Aftermath of the Drop - How to Buy the Dip (Trading 101)

Hello traders!

After yesterday's drop, we have witnessed a few interesting bullish developments that is counter productive against the main market sentiment. We are seeing a lot of bearish signs and from our last post, we mentioned a small correction that may happen due to the stock market; however, we can enter a long position here based on some of the bullish indicators.

Hidden Bullish Divergence:

Bitcoin is currently in a downtrend in a larger bull market trend - and no one can deny this. As with each pullback, we are still bullish even if price reaches the lower $9,000 levels. We are witnessing a large hidden bullish divergence which may be a signal that the bulls are still strong within this slight downtrend. For a hidden bullish divergence to play out, the market needs to make lower lows and lower highs. In preparation for a reversal, it leaves a higher low instead of a lower low. Also, there could be a higher high or equal high. In this price action, if there is a lower low in the oscillator (the RSI for instance), it indicates a hidden bullish divergence. It signals that the price could continue to go up. This phenomenon happens when the technical indicator shows a new extreme, but the corresponding price action does not.

While regular divergence often indicates trend reversals, hidden divergence tends to be a continuation indicator that shows when an opportunity to take advantage of a pullback in a trend may exist. This means that a trader can now choose to enter the market in the direction of the trend to profit from its continuation.

What we think:

We think this is a great opportunity to take a long if you are familiar with any sort of divergences. The hidden bullish divergence is a clear indicator of a continuation pattern, rather than a reversal pattern. This pattern can be negated any moment if the market decides to pull us further down, but that would create even a strong bullish divergence, rather than a hidden one!

Trade Safe.
X Force
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