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Divergence Software

Divergence trading is one of bitcoin signals that can be generated when using the stochastic technical indicator.

Divergence is a signal that a rally or retracement is losing steam and is likely to reverse. It means that last buyers or last sellers are pushing bitcoin price in one way while majority of other traders have stopped trading in that way and are cautious of a btcusd crypto currency price correction or pullback.

There are Four types of divergences.

Example 1: Bitcoin Classic Bullish Divergence

A Bullish Divergence in the stochastic indicator & the bitcoin crypto currency price is followed by a rise in btcusd crypto currency price.

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When the bitcoin price is making new lows the Stochastic indicator is not moving past its previous lows it is an indication that the down bitcoin trend is about to reverse and a bullish rally is likely to occur.

In the cryptocurrency trading above example the bitcoin price set a new low but it was not coupled with a new low in the measure of Stochastic, when btcusd crypto currency price formed a new low then the indicator should have followed suit, but the stochastic did not thence the divergence.

This setup is even stronger because there is combination of a divergence & then followed by a rise above the 20% level. This combines the Overbought & Over-sold levels.

Example 2: BTCUSD Classic Bearish Divergence

A Bearish Divergence in stochastic indicator and the btcusd crypto currency price is followed by a drop in btcusd crypto currency price.

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When bitcoin price is making new highs but the Stochastic is not moving beyond its previous high it is an indication the up bitcoin trend will reverse and that a bearish divergence will follow.

This trade set-up is interpreted to be even stronger because there a combination of a divergence with a dip below overbought 80 level.

Example 3: Bitcoin Hidden Bullish Divergence

This setup signifies a retracement in an upwards trend. This is the best type of divergence to trade, because you're not trading a bitcoin price reversal, but you are trading within the direction of the Bitcoin trend.

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Even though, the stochastic oscillator made a lower low the bitcoin price low was higher than the previous low (higher low: HL). This means though bears made a reasonable attempt to push bitcoin price down as indicated by the stochastic, this was not reflected on the bitcoin crypto currency price, & the bitcoin price did not make a new low. This is the best place to buy bitcoin crypto, since it is even in an upwards bitcoin trend there is no need to wait for a confirmation signal, because you are buying in an upwards Bitcoin trend.

Example 4: BTCUSD Hidden Bearish Divergence

This setup signifies a retracement in a downwards trend.

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This is the best type of divergence to trade, because you're not trading a bitcoin crypto currency price reversal, but you're trading within the direction of the trend. This is the best place to sell btcusd crypto, since it is even in a down bitcoin trend there is no need to wait for a confirmation signal, because you are selling in a downward Bitcoin trend.

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