Bitcoin / TetherUS
Short

Why context matters for divergences

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Contrary to popular belief, bearish and bullish divergences do NOT always mean trend reversal. Sometimes they mean trend retracement. For example, back when we had the bearish trend with a bullish divergence, we needed confirmation with a higher low to confirm that the bearish trend was over. Once this happened, we entered a bullish trend of higher highs and and higher lows.

Now we are seeing a bearish divergence. This can be seen as a short opportunity to support at around 38k, but until a lower low and a lower high is formed, it can't be seen as a trend reversal.

Context matters.

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