Want to master #crypto trading? Learn the 9 essential rules for trading divergences in our new thread!
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DISCLAIMER: This content is for informational purposes only, you should not construe any such information or other material as financial, legal, tax, investment, or other advice.
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Rule 1: Make sure your glasses are clean. In order for a divergence to exist, the price must have either formed a higher high, lower low, double top or double bottom.
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Rule 2: Draw lines on successive tops and bottoms. Connect the tops or bottoms of the price action and indicator to spot divergences.
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Rule 3: Keep your eyes on the price. Compare the tops or bottoms of the price action and indicator to spot divergences.
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Rule 4: Be consistent with your swing highs and lows. The highs or lows on the indicator must match those on the price action.
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Rule 5: Keep price and indicator swings in vertical alignment. The highs or lows on the indicator must line up with those on the price action.
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Rule 6: Watch the slopes. Divergence only exists if the slope of the indicator differs from the slope of the price action.
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