I Traded Divergence for 4 Months — Here’s What I Discovered

18-Sep-2025

If you’ve ever scrolled through trading X or watched YouTube strategy videos, you’ve probably heard the buzz around divergence trading.

Traders swear it’s the “secret” to catching reversals before they happen.

I decided to test it myself.

For four straight months, I traded divergence across crypto and forex pairs.

Here’s what I discovered—and why market structure still beats every indicator.

What Exactly is Divergence?

Divergence occurs when the price moves in one direction but your indicator moves in the opposite direction.

It’s a clue that momentum and price are not in sync.

There are two major types:

i. Regular Divergence

This is a classic reversal signal.

  • Bullish example: Price makes a lower low, but RSI makes a higher low.
  • Bearish example: Price makes a higher high, but the indicator makes a lower high.

Popular indicators include RSI, CCI, OBV, Stochastic RSI, Awesome Oscillator, Money Flow, Momentum Indicator, and MACD.

However, for my tests, I focused solely on RSI.

ii. Hidden Divergence

This confirms that the trend is still strong.

  • Bullish example: Price makes a higher low, but the RSI makes a lower low.
  • Bearish example: Price makes a lower high, but the indicator makes a higher high.

Why Regular Divergence Disappointed Me

Regular divergence looks great on historical charts, but it frustrated me in live trading.

Two big reasons:

  • Late entries: By the time you spot it, the price has already moved. Your stop is huge, and you’re chasing.
  • False starts: Divergence can appear, fail, and reappear multiple times. You take the first signal, get stopped out, and lose confidence.

Bottom line: Regular divergence is unreliable for real-time reversals.

But I will tell you what I use in the next subheading.

Keep reading.

Hidden Divergence: A Cleaner Edge

Hidden divergence performed far better.

Here’s the process that worked for me:

  1. Stay on higher timeframes to avoid noise.
  2. Bullish setup:
    • Wait for a Break of Structure upward.
    • Draw a horizontal line from the swing point that caused the BOS on both price and RSI.
    • If the RSI swing breaks but the price hasn’t, that’s your divergence.
    • Draw Fibonacci from the move and enter near the 0.79 retracement, targeting at least 2.5R.
  3. Bearish setup: Same rules, flipped.

This method was far more accurate than regular divergence.

But then, there are Trade-Offs. Even the stronger method isn’t perfect.

  • Few setups: Sometimes, only a handful of valid trades show up in a month.
  • Missed opportunities: Plenty of profitable moves happen without a hidden divergence signal.

Final Thoughts: My Discovery

After four months, here’s my honest conclusion:

Market structure is the real foundation of profitable trading.

Hidden divergence is a solid confirmation tool, but price action and structure create the best opportunities, especially in volatile crypto markets like Bitcoin and Ethereum.

Want to level up? Study market structure first.

Indicators should support your analysis, not drive it.

If you want to see this applied in real time, join our Monday live sessions where I analyze major forex pairs and share trade setups.

You can also join our mentorship session waitlist or our communities below:

Check out our in-depth guide on spotting high-probability trade setups—because understanding how price actually moves is what separates consistent traders from the crowd.

Tags: divergence trading, hidden divergence, market structure, crypto trading strategies, forex trading, RSI, price action, Nigeria Bitcoin Community

The post I Traded Divergence for 4 Months — Here’s What I Discovered appeared first on NIGERIA BITCOIN COMMUNITY.

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