Stochastic Oscillator Bullish Bitcoin Divergence and Bearish Divergence Bitcoin Trading

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

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

There are 4 types of divergence trading setups

Example 1: Classic Bullish Divergence

A Bitcoin Classic Bullish Divergence in the stochastic indicator & the bitcoin price is followed by a rise in bitcoin price.

Stochastic Oscillator Bitcoin Indicator Classic Bitcoin Bullish Divergence

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

In the trading example above the bitcoin price set a new low but it was not coupled with a new low in the measure of Stochastic oscillator indicator, when bitcoin price formed a new low then the stochastic indicator should have followed suit, but the stochastic indicator did not therefore the bitcoin trading classic divergence trade setup.

Bitcoin classic divergence trading setup is even stronger because there is combination of a divergence bitcoin trade setup and then followed by a rise above the 20% indicator level. This combines the Overbought and Oversold levels with this trade divergence trade setup.

Example 2: Classic Bitcoin Bearish Divergence

A Classic Bitcoin Bearish Divergence trading setup in the stochastic oscillator indicator & the bitcoin price is followed by a drop in bitcoin price.

Stochastic Oscillator Indicator Classic Bearish Divergence

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

This classic bitcoin trading bearish divergence trade setup is even stronger because there is a combination of a divergence with a dip below the overbought 80 level.

Example 3: Hidden Bullish Divergence

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

Stochastic Oscillator Indicator Hidden Crypto Bullish Divergence

Even though, the stochastic oscillator indicator made a lower low the bitcoin price low was higher than the previous low (higher low). This means that even though the crypto sellers made a good attempt to push bitcoin price down as indicated by the stochastic indicator, this wasn't reflected on the bitcoin price, and the bitcoin price did not make a new low. This is the best place to open a buy bitcoin trade, since it's even in an up-ward bitcoin trend there is no need to wait for a confirmation bitcoin trading signal, because you're buying in an up-ward Bitcoin trend.

Example 4: Hidden Bitcoin Bearish Divergence

Hidden Bitcoin Bearish Divergence trading setup signifies a retracement in a downward trend.

Stochastic Oscillator Indicator Hidden Crypto Bearish Divergence

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