How to confirm the mid-line selling point of the 1-hour MACD bar line divergence + the daily line breaking through the rising trend line?

A 1-hour MACD bearish divergence combined with a confirmed daily trend line break creates a high-probability mid-line sell signal, especially when retesting the broken support as resistance.

Jul 25, 2025 at 11:29 pm

Understanding the 1-Hour MACD Bar Line Divergence

The MACD (Moving Average Convergence Divergence) is a momentum oscillator widely used in technical analysis to identify trend reversals and potential entry or exit points. On the 1-hour chart, the MACD bar line divergence occurs when the price makes a higher high, but the MACD histogram forms a lower high. This signals weakening bullish momentum and a potential reversal. To confirm a bearish divergence, traders must observe the price action forming consecutive higher swing highs while the MACD bars progressively shrink in height. This mismatch between price and momentum is a critical early warning signal. It is essential to ensure the divergence occurs after a sustained uptrend to increase its reliability. Traders should wait for the MACD histogram to cross below its signal line to strengthen the bearish signal, indicating that downward momentum is accelerating.

Identifying the Daily Chart’s Rising Trend Line Break

A rising trend line on the daily chart is drawn by connecting at least two significant swing lows, projecting upward to anticipate future support levels. When price action breaks below this trend line with a confirmed close, it suggests a shift in market structure from bullish to bearish. To validate the break, traders should look for a candlestick closing below the trend line, ideally accompanied by increased volume. The stronger the number of touches the trend line has had prior to the break, the more significant the breakdown becomes. A break after multiple successful bounces increases the probability of a trend reversal. It is crucial to avoid reacting to intraday wicks that briefly pierce the trend line; instead, focus on daily closing prices to confirm validity. Once the break is confirmed, the former trend line may act as resistance in future price movements.

Combining Timeframes: Aligning 1-Hour and Daily Signals

For a high-probability sell setup, the confluence of signals across multiple timeframes enhances reliability. When the 1-hour MACD bearish divergence aligns with a daily trend line breakdown, it strengthens the case for a mid-line selling point. The mid-line refers to the middle of a recent price range or a retest of the broken trend line area. After the daily trend line is breached, price often retests the broken support, now acting as resistance. This retest zone becomes the ideal mid-line selling point. At this juncture, traders should check if the 1-hour MACD remains in bearish territory—ideally with the histogram below the zero line and the signal line above the MACD line. The convergence of both indicators across timeframes reduces false signals and increases confidence in initiating a short position.

Step-by-Step Confirmation of the Mid-Line Sell Signal

To precisely confirm the mid-line selling opportunity, follow these steps:

• Draw the rising trend line on the daily chart using at least two confirmed swing lows. Extend it into the future to identify the potential breakout zone.
• Monitor for a daily close below the trend line. Ensure the close is not a false break by checking volume and the next day’s price action.
• Switch to the 1-hour chart and identify recent price highs. Check if the latest high is higher than the prior high while the MACD histogram shows a lower peak—this confirms divergence.
• Wait for the price to retrace upward toward the broken trend line area, now expected to act as resistance.
• Observe the 1-hour MACD behavior during the retest: the histogram should remain below zero, and the signal line should stay above the MACD line.
• Enter the short trade when price shows rejection at the retest zone—such as a bearish engulfing candle, pin bar, or inside bar breakdown.
• Place a stop-loss just above the retest candle’s high to manage risk.
• Set a take-profit level based on prior support zones or use a risk-reward ratio of at least 1:2.

Each of these steps ensures a systematic and objective approach, minimizing emotional decision-making.

Filtering False Signals and Managing Risk

Not every divergence or trend line break leads to a sustained reversal. To filter out false signals, traders should incorporate additional confirmation tools. Volume analysis is crucial—declining volume during the retest suggests lack of buyer interest, supporting the bearish case. The Relative Strength Index (RSI) on the 1-hour chart should ideally show lower highs, reinforcing the momentum divergence. Additionally, monitoring key horizontal support and resistance levels can help determine whether the breakdown occurs at a significant price zone. If the trend line break happens near a major psychological level (e.g., $30,000 in Bitcoin), the signal gains more weight. Risk management is vital: never risk more than 1–2% of trading capital on a single setup. Use trailing stops if the trade moves favorably, locking in profits while allowing room for volatility.

Practical Example Using a Cryptocurrency Chart

Consider a scenario with Ethereum (ETH/USDT) on a daily chart showing a well-established rising trend line from $2,800 to $3,200 over six weeks. The price reaches $3,500 but closes below the trend line at $3,150. The next day, price drops further, confirming the breakdown. On the 1-hour chart, price had formed a higher high at $3,500, but the MACD histogram peaked lower than the previous high at $3,400—clear bearish divergence. Days later, price retraces to $3,250, near the broken trend line. At this level, the 1-hour chart shows a bearish engulfing candle, MACD remains below zero, and volume increases on the down move. A trader enters a short position at $3,240, places a stop at $3,280, and targets $2,900 based on prior support. This example demonstrates how the mid-line sell point is not just a price level but a confluence of technical factors.

Frequently Asked Questions

What if the MACD divergence appears but the daily trend line hasn’t broken yet?

A divergence without a confirmed trend line break is premature. Wait for the daily close below the trend line before considering any action. Premature entries often result in losses due to strong countertrend moves.

How long should I wait for the retest after the trend line break?

There is no fixed timeframe. Some retracements occur within 1–3 days, while others may take weeks. Patience is key. Monitor price action closely and avoid forcing a trade if the retest doesn’t materialize.

Can this strategy be applied to altcoins?

Yes, but altcoins are more volatile. Ensure sufficient trading volume and historical data to draw reliable trend lines. Lower-cap altcoins may exhibit erratic MACD behavior, so use tighter risk controls.

Should I use leverage when executing this sell signal?

Leverage amplifies both gains and losses. Given the complexity of multi-timeframe analysis, it is advisable to use conservative leverage or trade spot first until the strategy is consistently profitable.