Trading Bias: Neutral - depending on which scenario gets triggered first.
Here we see diverging quite strongly, suggesting a potential bounce off the support channel. However, we also see BTCUSD in a clear downtrend at the moment. This leads to 2 potential scenarios
If we break and close above the blue then upside targets are in play.
If we break and close below the green support channel then downside targets are in play.
Partial profits taken once more.
The next short play is still potentially viable depending on whether we reach the completion point of the Bat.
Price can go either up, down, or sideways. Please read the entire idea in the future to understand the conditional triggers that bring one set of targets into play or the other.
You can definitely make use of secondary indicators to gauge momentum. Does RSI oversold mean Bitcoin will go up? Of course not. It is simply one tool in the toolbox that you can use in confluence with other variables.
"These sorts of thumb rules are violated frequently" --> As stated above, RSI divergence is one tool... not a rule in and of itself.