How does MACD divergence signal potential trend reversals in the world of cryptocurrencies?

1 answers

• Alejandro AzconaJan 23, 2025 · 7 months ago
  MACD divergence is a widely used indicator in the world of cryptocurrencies to identify potential trend reversals. It works by comparing the price action of a cryptocurrency with the MACD indicator. When the price is making higher highs, but the MACD indicator is making lower highs, it suggests that the current uptrend is losing momentum and a reversal may occur. Conversely, when the price is making lower lows, but the MACD indicator is making higher lows, it indicates that the downtrend is losing momentum and a reversal may be on the horizon. Traders often use MACD divergence as a signal to enter or exit positions, but it's important to consider other factors such as market conditions and news events for a more comprehensive analysis.
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