In this technical analysis I will go into depth on how to trade an RSI Divergence taking this beautiful textbook example here on NWC.
RSI Divergences help to mark reversal points. In this trade set-up I suggest a long position on NWC / BTC after we spotted an RSI Divergence and already have confirmed it at the horizontal level.
The horizontal level gets an insane confluence here after seeing three indicators align. First of all, the price is near the golden zone of the 0.618 fibonnaci retracement, second of all the price is near a strong horizontal zone and thirdly the price has seen a confirmed rsi bullish divergence.
*So, what are RSI Divergences*? Regular divergences are reversal signals. When a regular divergence occurs, it indicates that the trend is strong but its momentum has weakened. It provides an early warning that a trend reversal (or at least a pull back) is likely to follow soon.
Regular divergences can be powerful and reliable entry triggers. In fact, as far as oscillators go (and technical indicators in general), regular divergences are considered the most reliable early signs of a local bottom or top.
Especially when confluence is present, regular divergences can provide “high probability” trading setups. Therefore, strategies involving divergences tend to be relatively forgiving when traded using a low Risk Reward Ratio.
For smaller marketcap coins it is also important to check fundamental principles. As you noticed over the last weeks I am a huge fan of NWC. As a trader myself, I am looking forward to the functionality that NWC will add. Interesting knowledge is that the roadmap of NWC is publicly available on their website, which means you can easily predict whenever major events are going to happen and trade accordingly. I found that in Q4 the mobile app is likely to be released, which adds to the bullish sentiment of NWC right now.
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-------------------------------------------------------------- Disclaimer! This post does not provide financial advice. It is for educational purposes only!
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