Hidden bullish and bearish divergence: a powerful tool for trading 🚀

Divergence is a key model in technical analysis. It indicates possible trend changes in cryptocurrencies. Classic divergence is visible at the end of a sustained trend. Hidden? It appears after consolidation. It seems to foreshadow the continuation of the main direction. 🔍

Traders who see these patterns in time gain a huge advantage. Especially in such a crazy market of the year 2025. 🌕

What is divergence?

Divergence occurs when the price goes against the indicators. A strange situation. The current trend is weakening. The direction may change. 📊

Two types:

• Bullish Divergence: suggests a rise
• Bear Divergence: warns of a decline

Seeing the bullish divergence, the "shorts" rush to close their positions. Meanwhile, those without positions or in "longs" consider entering or adding to their positions.

Regular vs. Hidden Divergence

Regular Divergence

It appears when the price makes higher highs, but the indicator makes lower ones. Or vice versa for bearish. Usually, this marks the end of a long trend. Correction is near.

Hidden Divergence

Here the price makes a higher low, while the indicator makes a lower low. Often visible after consolidation. It seems that the original trend will continue soon. 🔥

For example, bullish hidden divergence occurs during a correction of growth — the price is above the minimum, the oscillator is below the minimum. The bulls will return.

Bearish hidden divergence — the opposite. Price is below the maximum, oscillators are above the maximum. The trend will reverse.

How to Detect Hidden Divergence 🧐

Technical indicators are needed. Suitable ones include:

• RSI
• MACD
• Stochastic

MACD for detecting divergence

With MACD, you can look at the MACD line, the signal line, or the histogram. Thickening the MACD line seems to help.

1. Determine the trend
2. When rising, look for bullish hidden (MACD below the minimum, price above the minimum)
3. During a drop — bear hidden (MACD above the maximum, price below the maximum)

Stochastic

Stochastic 15-5-5 or 14-3-3 also works. It's better to make the %K line thicker.

Trading on Hidden Divergence 📈

Step 1: Filtering

Look for hidden divergence in the trend:

• Growth - bullish hidden pro purchase
• The fall is a bearish hidden pro sale

( Step 2: Stop-loss Set beyond the extremum:

• For bullish — just below the minimum
• For bearish - slightly above the maximum

) Step 3: Goals Even in a crazy market in 2025, you need an exit plan. On 1-2 hour charts, aim for at least a double stop. If the risk is 100 ETH, the target is 200 ETH profit. 💰

Hidden Divergence Limitations ⚠️

In hindsight, the divergence is obvious. In real time — not so much. Market emotions interfere with analysis. Sometimes a bullish rise is just preparation for bearish divergence.

When divergence appears late in the trend, the risk/reward is not as good. Most of the movement is behind.

In the cryptocurrency markets of 2025, hidden divergence remains a cool tool. Especially when everything is flying up and down and no one understands anything. 🌟