Technical divergence occurs when the price of an asset moves in one direction while a technical indicator moves in the opposite direction. This discrepancy often signals a weakening of the current price trend and suggests a potential reversal. Traders use divergence to identify situations where momentum does not confirm price action, indicating a possible change in market direction.
Context
The discussion around technical divergence in crypto markets frequently focuses on its application in predicting price reversals for highly volatile digital assets. A key debate involves the reliability of divergence signals in a market prone to rapid sentiment shifts and external influences. Observers watch for instances where indicators like the Relative Strength Index or MACD contradict price movements, offering clues about potential shifts in Bitcoin or altcoin trajectories.
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