Recently, I’ve been getting a lot of questions about MACD divergence, so I’d like to share some practical points here. Especially based on what I noticed in my analysis of the BTC chart, I think many traders may be misunderstanding this indicator.

First, let’s correct the most important misconception. The appearance of macd divergence does not mean the price will reverse. The divergence is simply a signal that momentum is getting exhausted, or that the likelihood of a correction is increasing. In other words, divergence ≠ reversal. If you don’t understand this, the probability of suffering losses by trusting only the indicator increases.

When you look at the actual BTC 4-hour chart, you can see a clear macd divergence appeared, but the market only showed signs of getting tired and did not lead to a reversal. Situations like this are not rare.

This is where composite judgment becomes important. You shouldn’t rely only on the macd divergence signal—you need to combine the overall market trend, fundamentals, and other technical indicators.

For example, when the BTC daily chart is within a certain range, and the price touches the upper limit and macd divergence appears, from a simple perspective, you might enter a short position here and take profit near 20,000 points. But when you combine it with wave theory, you can see that around 25,000 could enter the correction phase of B wave. If that’s the case, 20,000 is likely to mark the beginning of C wave. Considering the support levels of the moving averages as well, this becomes a stronger entry point.

In the end, if you want to make effective use of divergence signals, it’s dangerous to make decisions based on a single indicator. By combining trendlines, wave theory, and moving averages, you can build a reliable trading strategy for the first time.

In the next article, I’m planning to go deeper into wave theory. If you want to improve the accuracy of your technical analysis, it’s important to understand these basics thoroughly. Wishing you all profits.