This is an article on #Binance about MACD divergence. I share my important understanding and application of this king of indicators with friends in need.

This article still uses #BTC as a case study.

1: What does MACD divergence mean?

We need to make a point clear: divergence represents the exhaustion of momentum or the increased possibility of adjustment, but it does not necessarily mean a reversal. In other words, divergence ≠ reversal.

For example: Let's look at the relationship between the 4-hour candlestick chart and MACD in the above figure. Through observation, we found that MACD divergence appeared, but the market only showed an upward exhaustion, and there was no reversal.

Conclusion: Especially for those who do contracts and refer to the MACD indicator to trade, you must understand this simple truth. Otherwise, there is a certain probability of suffering losses if you only enter the market referring to the MACD divergence indicator.

                                                                                                                                                              

2: The judgment of divergence signals should take into account the market trend and fundamental analysis, and should not be judged based on a single indicator

For example: #BTC In the daily level, within the range, when the yellow arrow touched the upper edge of the range, MACD divergence appeared. After reviewing the market, it was concluded that the market had a correction to 20,000 points and then quickly rose.

Conclusion: If you make a short-term contract short order, you will make a profit on this order. However, if you can combine and apply the wave theory, you will predict that the MACD divergence near 25,000 may enter the adjustment wave of wave B, so the 20,000 point position is the starting point of wave C (the support factors of this position can be found in the previous article about moving averages). You will find a good entry point in the sub-level of this position to earn profits from wave C.

                                                                                                                                                               

Summary of this issue:

Correctly understand the meaning of divergence: divergence ≠ reversal

The judgment of divergence signals should take into account the market trend and fundamental analysis, and should not be judged based on a single indicator. For trend judgment, you can refer to the method analyzed before: the article on trend lines

Once you have a method to judge the trend and use wave theory + MACD + moving average at the same time, you can easily capture good profit margins.

In the next article, we will discuss: Wave Principle

Please pay attention to avoid missing the next issue of knowledge sharing ~ I wish you all a happy trading and more profits ~~