MACD Sees Through the Main Force's Washout Scam
🟧Divergence Phenomenon
1/Bullish Divergence
During the process of a cryptocurrency price decline, if the price makes new lows but the MACD indicator's DIF line or MACD histogram does not make new lows simultaneously, this is a bullish divergence. This often indicates that the downtrend of the price is about to end, and the main force may be conducting a final washout by suppressing the price.
For example, if the price drops from 10 yuan to 8 yuan, then to 7 yuan, continuously hitting new lows, but at this time the MACD DIF line rises from -0.5 to -0.3, a bullish divergence occurs. This indicates that although the price is falling, the momentum of the decline is weakening, and the main force may be secretly accumulating, after which the price is likely to reverse and enter a main upward wave.
2/Bearish Divergence
During the process of a cryptocurrency price increase, if the price makes new highs but the MACD indicator's DIF line or MACD histogram does not make new highs simultaneously, this is a bearish divergence.
However, during the washout operation before the main upward wave, the main force may create a short-term illusion of bearish divergence. At this time, it is necessary to comprehensively judge based on the position of the price and other indicators.
If the price appears to have a bearish divergence at a relatively low level, but there are no significant signs of increased selling volume, and other technical indicators do not show obvious sell signals, then this may be a washout tactic of the main force, aimed at intimidating those investors who do not have a comprehensive technical analysis.
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