Discussion on Regular & Hidden Bullish and Bearish Divergences
Hi everyone. Just wanted to provide some more information and to offer some clarity on the type of divergence pattern that has formed and is potentially still forming.
There are actually 4 types of divergences and here is typically what we look out for:
Regular Divergences
1) Bullish Divergence - Lower Low in Price + Higher Low in RSI
- This usually occurs when the asset price movement has been on a downtrend and usually is a signal that the bears are exhausted and a potential bottoming and reversal is taking place. (This actually did happen when BTC price was at its bottom of 6400+ - check chart)
2) Bearish Divergence - Higher High in Price + Lower High in RSI
- This usually occurs when the asset price movement has been on an uptrend and usually is a signal that the bulls are exhausted and a potential top and reversal is taking place. (This actually did happen when BTC was at its 14K peak - on the way down to 6400+ this bearish divergence played out a few times). This is also what is happening in this chart and the bears are making a good case of it.
Hidden Divergences
3) Hidden Bullish Divergence - Higher Low in Price + Lower Low in RSI
This usually occurs during an uptrend price retracement or correction. It indicates that the bulls still have strength and the uptrend will continue. Best time to buy those dips! (This actally did happen when BTC was trending upwards and when the corrections were taking place along the way up to 14K from 3K+ (previous bottom). This is also what I see on this BTCUSD chart. BTCUSD bottomed at 6400+ and has been uptrending ever since with corrections. As a bull, I believe this is another minor retracement or correction after touching 9500+ and a possibly a good chance to buy the dips.
4) Hidden Bullish Divergence - Lower High in Price + Higher High in RSI
This usually occurs during a downtrend price retracement or correction. It indicates that the bears are not done yet and there is more downtrend continuation to occur and bears can probably load up or enter a short trades at possible resistance areas.
So in this case bears make their case that a bearish divergance has formed and a potential reversal is taking place and longer term downtrend is to follow. The bulls make a case that this is a correction or retracement from the uptrend from 6400+ and breakout of the downward channel from Jun 2019 that showed BTCUSD has indeed bottomed and a longer-term uptrend is taking place.
I am pretty new at this and just want to share this interesting position I found myself in. Refer to the chart below for the comments from the bears and their point of view.
Here is a website I found that explains this in more detail: altcointrading.net/divergences/
There are actually 4 types of divergences and here is typically what we look out for:
Regular Divergences
1) Bullish Divergence - Lower Low in Price + Higher Low in RSI
- This usually occurs when the asset price movement has been on a downtrend and usually is a signal that the bears are exhausted and a potential bottoming and reversal is taking place. (This actually did happen when BTC price was at its bottom of 6400+ - check chart)
2) Bearish Divergence - Higher High in Price + Lower High in RSI
- This usually occurs when the asset price movement has been on an uptrend and usually is a signal that the bulls are exhausted and a potential top and reversal is taking place. (This actually did happen when BTC was at its 14K peak - on the way down to 6400+ this bearish divergence played out a few times). This is also what is happening in this chart and the bears are making a good case of it.
Hidden Divergences
3) Hidden Bullish Divergence - Higher Low in Price + Lower Low in RSI
This usually occurs during an uptrend price retracement or correction. It indicates that the bulls still have strength and the uptrend will continue. Best time to buy those dips! (This actally did happen when BTC was trending upwards and when the corrections were taking place along the way up to 14K from 3K+ (previous bottom). This is also what I see on this BTCUSD chart. BTCUSD bottomed at 6400+ and has been uptrending ever since with corrections. As a bull, I believe this is another minor retracement or correction after touching 9500+ and a possibly a good chance to buy the dips.
4) Hidden Bullish Divergence - Lower High in Price + Higher High in RSI
This usually occurs during a downtrend price retracement or correction. It indicates that the bears are not done yet and there is more downtrend continuation to occur and bears can probably load up or enter a short trades at possible resistance areas.
So in this case bears make their case that a bearish divergance has formed and a potential reversal is taking place and longer term downtrend is to follow. The bulls make a case that this is a correction or retracement from the uptrend from 6400+ and breakout of the downward channel from Jun 2019 that showed BTCUSD has indeed bottomed and a longer-term uptrend is taking place.
I am pretty new at this and just want to share this interesting position I found myself in. Refer to the chart below for the comments from the bears and their point of view.
Here is a website I found that explains this in more detail: altcointrading.net/divergences/
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.