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Why is hidden bearish divergence in RSI considered a bearish signal in the cryptocurrency market?

avatarJedyAndyDec 25, 2021 · 3 years ago3 answers

Can you explain why hidden bearish divergence in RSI is considered a bearish signal in the cryptocurrency market? What are the factors that contribute to this interpretation?

Why is hidden bearish divergence in RSI considered a bearish signal in the cryptocurrency market?

3 answers

  • avatarDec 25, 2021 · 3 years ago
    Hidden bearish divergence in RSI is considered a bearish signal in the cryptocurrency market because it indicates a potential reversal in the price trend. When hidden bearish divergence occurs, it suggests that the price is making higher highs while the RSI is making lower highs. This divergence indicates a weakening of the bullish momentum and a possible upcoming downtrend. Traders use this signal to anticipate a potential price drop and adjust their trading strategies accordingly.
  • avatarDec 25, 2021 · 3 years ago
    Hidden bearish divergence in RSI is a bearish signal in the cryptocurrency market because it reflects a negative divergence between the price and the RSI indicator. This divergence suggests that the price is showing strength on the surface, but the underlying momentum is actually weakening. It indicates that the buyers are losing control and the sellers might take over soon. This interpretation is based on the assumption that the RSI is a reliable indicator of market sentiment and momentum. However, it's important to note that no indicator is perfect and traders should consider other factors before making trading decisions.
  • avatarDec 25, 2021 · 3 years ago
    Hidden bearish divergence in RSI is considered a bearish signal in the cryptocurrency market because it indicates a potential shift in market sentiment. When the price is making higher highs but the RSI is making lower highs, it suggests that the buyers are losing strength and the sellers might take control. This interpretation is based on the belief that the RSI is a leading indicator of market trends. However, it's important to note that hidden bearish divergence is just one of many signals that traders use to analyze the market, and it should be used in conjunction with other technical indicators and fundamental analysis for more accurate predictions.