Operations Techniques When Moving Averages Diverge

1. When the moving averages diverge upwards, it is a signal for a price increase. Most friends only pay attention to two functions of the moving average system: the golden cross and the death cross, and the support role of the moving averages on the price. In fact, the more important function of the moving average system is the sudden divergence from being entangled, which is a crucial early signal for price increases.

2. Another divergence pattern

If the three moving averages of any cryptocurrency are entangled for several days, and the price suddenly diverges upwards (bullish), then although the moving averages do not show a golden cross, this pattern can indicate a significant potential for price increases in the market. If the trading volume increases and the price rises, the moving average system will eventually "open up" and diverge completely. The divergence of moving averages must be triggered by a price increase, and for the price to rise, there must be an increase in trading volume; otherwise, the increase may reverse. If the moving average system diverges and then quickly returns to being entangled, the divergence is ineffective.

When making specific operations, one should intervene after the convergence of moving averages has turned into divergence, as this divergence pattern is caused by the increase in the price of the cryptocurrency. It is generally advisable for investors to choose the parameters of 5-day, 10-day, and 30-day moving averages.