Good morning tradingviewers. lol If you are interested in where Bitcoin is going, how will go there and when, please do not follow this post. I am not a professional trader and these are my personal ideas only. Today here we are going to look and wait for divergence formation to try to understand how they may work and help future trends. I have not prepared any chart yet, do please desregard the above. Thank you for following.
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One general rule is that whan you find one you must wait.lol
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It may take time on longer timeframes for the price to diverge with RSI but if you wait and be patient, when the divergence corrects, may produce intersting moves. Especially if you find them in longer timefrimes. On short timefrime I usually don't trust them very much.
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Before going into divergence price must find a support or a resistence to stop and think for a while
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This happen in all timeframes
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They almost move at the same time when they are in action but during pauses they may differ and provide signals that can be interpreted in various ways. It depends on the scenario you are in, it depends on forces into play. It depende on many factors. When I started studying divergences on youtube everybody was saying they were a very powerful tool Teachers, professor, expert traders. Everybody spoke well about divergences.
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They were not working for me!
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My amatour demo trades were ending all out of money.
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Was intelligent and educated people wrong? Or was me that wasn't able to listen to it properly?
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So I put my self-arrogance on one side and decided to investigate.
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Well, to cut story short I didnt find out anything. They are just simple. That's it.
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Sorry I diverged. I will take a pause and come back in a moment trying to post some snapshots
Not only RSI diverge with price. Above I diverged on myself. Sometime also news diverge from reality. Life if plenty of divergences. lol
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diverge [dih-vurj, dahy-] Spell Syllables Synonyms Examples Word Origin See more synonyms on Thesaurus.com verb (used without object), diverged, diverging. 1. to move, lie, or extend in different directions from a common point; branch off. 2. to differ in opinion, character, form, etc.; deviate. 3. Mathematics. (of a sequence, series, etc.) to have no unique limit; to have infinity as a limit. 4. to turn aside or deviate, as from a path, practice, or plan. verb (used with object), diverged, diverging. 5. to deflect or turn aside.
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If you know where price is going it's a different story. You don't need divergence. But if you don't know your targets it may be a good idea to wait for divergences and see what they tells you right?
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Also divergence may be important depending on where it is formed.
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If price diverge on an obstacle it may go the opposite way. But at some point may also change it's mind and come back on its previous path. It depends on the forces that are acting.
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Let's take a look as an example to the snapshot of the hourly chart of Bitcoin
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That one was a divergence. I wrote a post on the 23rd of Jan about that forming divergence. I did NOT get it right but when price reacted to that divergence on that psycologically important round level it prompted a timid run for a top that was stopped against resistence.
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Be carefull that the above is a chart of the past
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As divergences on lower timeframe may be tricky, I didn't trust it and went for that double bottom. Have you seen how it developed? You will see it if you click on the above and see by yourself how the price reacted to that. It's an hourly chart so, if you have been following BTC like I did for the last 5 days, you should be able to feel its sentiment. lol
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Felt it? Good!
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The following snapshot does not count but I need to use it as a reference for focusing where this is happening in time
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I can see that RSI is stretching but cannot see candlesticks from here. It's seems like diving but I am not interested in what is doing now. I am interested in what will do next. If the are no clear opportunities at the horizon it is always better to wait and look for the right moment.
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So I ask myself. What would happen if RSI stretches further to the approx level of where the arrow is and price is supported?
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What would happen if price breaks that support and RSI stretches further in ovesold zone?
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Will the price ever reach that support level?
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Let's see from a different angle and let's keep looking for divergences
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The angle is the same sorry. Still 1hr tfr chart but with few simple trendline added
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Does it looks like price is following RSI or the other way around?
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Let's look at the picture closer...
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This is the 30 minutes tfr
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Findings: RSI oversold and descending trendlines. Looks like a descending channel but price is still well above previous low therefore the descending channel has not been confirmed.
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I don't know if these are diverging tops. I am not a professional. I don't know how they should be interpreted.
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Price is supported at around 10500.
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I don't see any divergence here apart the ones between the two big fall.
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But only on MACD. RSI don't.
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Is that forming low sopported at that level?
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Will the support hold? Is it holding? How?
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Looks all very horizontal to me but I appreciate price gets near to a vertex of some type
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I go look for some and be back soon. Thank you for following. I know nobody is but I like thinking it. lol
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Price diverge but divergence on short tfr are not to be trusted. If bearish pressure is strong price will return pushing against the support and if the push is successfull price will look for another support unless it re-enters it rapidly.
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After hitting 10500 price diverge but this is 5min chart and means nothing standalone. Bears are winning battles at the moment there fall price remain under bearish pressure and you should always follow the major trend. Trend is your friend say professional traders. I am not. I am an amatour and these are my personal ideas only. Go to lunch. Ciao
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What could happen if price do not follow RSI?
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Lot's of sellers there. Better be carefull and go to eat.