Divergences are probably one of the most accurate trading signals. To identify a divergence you need to compare an oscillator to the chart. Oscillators are technical analysis tools that constructs high and low bands between two extreme values; Bitcoin Indicator B.

Regular Divergence

Regular divergence occurs when the oscillator makes a lower high or low while the price does the opposit. It used as a possible sign for a trend reversal. Regular divergences are highly accurate trading signals.

Bullish

The price makes lower lows while the oscillator is making higher lows. This is considered to be regular bullish divergence. This normally occurs at the end of a downtrend.

Usually we can keep the position open for longer term as the price will form an uptrend for a while, however the new trend might be a short one.

If we entered this trade with 10x leverage and stopped it when the money flow changed it’s color we would have took 30-40% profit.

regular bullish divergence

BTC / 30m timeframe

wavetrend divergence

ETH / 15m timeframe

Bearish

This type of divergence can be found in an uptrend. After price makes the second high and the oscillator makes a lower high you can probably expect the price to reverse and drop.

Be aware because the price might bounces back after the drop, however usually this means the start of a new downtrend.

In this example we would have easily took even 50% profit with 10x leverage with TP at the first bullish dot below level -1, however there was much more potential in this trade using higher leverage.

Hidden Divergences

Hidden divergence occurs when the oscillator makes a higher high or low while the price action does the opposit. This often tends to occur within an existing trend and usually indicates that there is still strength in the prevailing trend.

Bullish

Hidden bullish divergence happens during a correction of an uptrend when the value of an asset makes a higher low while the oscillator is still showing a lower low.

The correction of the uptrend might keeps continue after the price reacted to the divergence. So it might be better considering it as a short term trade and taking profit soon.

With a 15x leverage we would have took around 40% profit on this trade if we closed it when momentum wave crossed up level +1. Usually it’s safer to close the trade before the new wave cross.

wavetrend divergence

BTC/ 1H timeframe

ethereum divergence

ETH / 45m timeframe

Bearish

This occurs when price makes a lower high while the oscillator is making a higher high. You’ve probably guessed this occurs in a downtrend.

Be aware because correction may happen after the price reacted to the divergence. Don’t keep your position open for too long rather take profit as soon as the money flow is bottoming.

We would have took nearly 70% profit with 12x leverage on this trade opportunity if we closed it when money flow and momentum wave looked like bottoming.

Magic Dots

Magic Dots are located on the top and bottom of the Bitcoin Indicator B. These dots also indicate divergences but for the money flow itself. There are some other oscillators built-in to Bitcoin Indicator B which are being analyzed nonstop to find the best entries for you. These oscillators are unvisible for users because of the simplicity of the Indicator. Once all the criteria meet “Magic Dots” AKA Money Flow Divergence indictions appear telling you an upcoming trend change is in the corner…

For divergence, Magic Dot and other strategies read our Articles!

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