A bullish divergence occurs when an asset’s price makes lower lows, but its momentum indicator registers higher lows. This technical signal suggests that selling pressure may be weakening, potentially preceding an upward price movement. It is a pattern observed in technical analysis, particularly within cryptocurrency markets, to gauge potential trend reversals. The divergence between price action and momentum offers traders an indication of underlying market sentiment shifts.
Context
Discussions surrounding bullish divergence frequently center on its reliability as a predictive indicator in the volatile cryptocurrency landscape. Analysts debate the optimal timeframes and accompanying indicators for confirming such signals. The potential for false signals remains a critical consideration, influencing trading strategies and risk management protocols for digital assets.
Despite robust network activity and institutional confidence, Ethereum's price remains range-bound due to volatile exchange behavior and unstaking queues.
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