Understanding the different types of divergences and how they tend to play out in trading. Handy reference to be able to identify divergences quickly and accurately.

2. Understanding Divergences for Crypto Trading
Divergences can be spotted in several Oscillators, such as RSI, StochRSI, MACD, CCI, OBV,
etc.. and they can be Bullish or Bearish
Price action (PA) and Oscillators should follow the same path, when they don’t, it’s called a
Divergence, sometimes named wrongly as they can also be Convergences.
The so called “Divergence” in Stock or Crypto is when price action (PA) and oscillator are
following different paths – converging or diverging, and they can be strong, medium, weak or
hidden, they are also classified as Class A, B and C for strong, medium and weak.
While Classic Divergences (Class A, B and C) point to a reversal being close, Hidden Bullish or
Bearish Divergence point a continuation of the trend.
They act 90% of the time although there is no time frame to do it and many times they create 3
legs when it becomes very strong and can work as an entry as it is time to move / reserve.
Bullish Divergence – When Price Action makes a flat bottom or lower low and higher low on
Oscillator – convergence.
– Pay attention to Price Action and Oscillator from below.
Bearish Divergence – When Price Action makes a flat top or higher high and higher low on
Oscillator – divergence.
– Pay attention to the Price Action and Oscillator from above.
Hidden Bullish Divergence – When Price Action makes a higher lows and lower lows on
Oscillator – divergence.
– Pay attention to the Price Action and Oscillator from below (swing lows on the way up) –
Normally when in uptrend.
Hidden Bullish Divergence is telling us that Oscillator is recharging to go back up again –
Continuation of up trend.
Hidden Bearish Divergence – When Price Action makes higher lows and higher highs on
Oscillator – convergence.
– Pay attention to the Price Action and Oscillator (swing highs on the way down) – Normally in
downtrend.
Hidden Bearish Divergence is telling us that Oscillator is creating space to go back down again –
Continuation of downtrend.
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