MACD bottom divergence twice is more reliable?

A double MACD bottom divergence occurs when price makes lower lows but MACD forms higher lows twice, signaling weakening bearish momentum and a potential bullish reversal.

Jul 26, 2025 at 08:49 am

Understanding MACD Bottom Divergence

The MACD (Moving Average Convergence Divergence) is a widely used technical indicator in the cryptocurrency trading community. It helps traders identify potential trend reversals by analyzing the relationship between two moving averages of an asset’s price. A bottom divergence occurs when the price of a cryptocurrency makes a lower low, but the MACD indicator forms a higher low. This signals that downward momentum is weakening, suggesting a potential upward reversal.

When a MACD bottom divergence appears, it implies that selling pressure is decreasing even as the price continues to drop. This mismatch between price action and momentum can serve as an early warning sign of a bullish reversal. However, not all divergences lead to sustained price increases. Some resolve with minimal price movement or are followed by continued downtrends. This is why traders often look for confirmation through additional signals, such as volume spikes or candlestick patterns.

What Does "Twice" Mean in MACD Divergence?

When traders refer to "MACD bottom divergence twice", they are describing a scenario where two consecutive divergence setups occur during a downtrend. The first divergence appears at an early stage of the decline, followed by a second divergence at a later, lower price point. This double occurrence is believed by many to strengthen the reliability of the reversal signal.

Each divergence event involves:

• The price making a new lower low
• The MACD histogram or MACD line forming a higher low compared to the prior divergence
• A visible reduction in bearish momentum between the two lows

The idea is that if momentum fails to follow price lower not once but twice, the probability of an upward reversal increases. This repetition suggests sustained weakening of selling pressure, which may culminate in a bullish breakout.

How to Identify Double MACD Bottom Divergence on a Chart

To spot a double MACD bottom divergence on a cryptocurrency chart, follow these steps:

• Set up the MACD indicator on your trading platform (default settings are usually 12, 26, 9).
• Look for a clear downtrend in the price of the asset, such as Bitcoin or Ethereum.
• Identify the first low in price and observe the corresponding MACD value at that point.
• Wait for the price to decline further to a second lower low.
• Compare the MACD reading at the second low with the first—the MACD should show a higher value (less negative), indicating divergence.
• Repeat the process to confirm a second divergence after the first one, ensuring both meet the criteria.

For example, on a BTC/USDT 4-hour chart:

• First low at $28,000 with MACD at -0.35
• Price drops to $27,500 (lower low), but MACD only reaches -0.30 (higher low) → first divergence
• Price dips again to $27,200, yet MACD reads -0.28 → second divergence

This pattern shows two separate instances where price made lower lows but MACD failed to confirm, reinforcing the idea that bearish momentum is fading.

Why Double Divergence May Be More Reliable

A single MACD divergence can be misleading—many resolve without a significant price reversal. However, when two divergences appear in sequence, the signal gains strength for several reasons:

• Consistent momentum decay: Each divergence reflects weakening selling pressure. Two instances suggest this is not a temporary fluctuation but a structural shift.
• Increased trader awareness: As more technical traders notice the first divergence and then a second, collective market psychology may shift toward bullish expectations.
• Higher confirmation rate: Historical chart analysis shows that double divergences tend to precede stronger reversals than single ones, especially when combined with support levels or volume increases.

Moreover, in volatile crypto markets, single signals are often whipsawed. A repeated divergence pattern filters out some of this noise. When the MACD line or histogram consistently fails to reach new lows despite lower prices, it becomes harder to justify continued bearish sentiment.

Combining Double Divergence with Other Confirmation Tools

While double MACD divergence is a strong signal, it should not be used in isolation. Traders enhance reliability by combining it with other technical tools:

• Volume analysis: Look for rising volume during the second divergence or at the breakout point. Increasing volume on upward moves confirms buyer participation.
• Support levels: If the second divergence occurs near a known support zone (e.g., previous swing low or Fibonacci level), the reversal probability increases.
• Candlestick patterns: Bullish patterns like hammer, bullish engulfing, or morning star near the divergence zone add confirmation.
• RSI confirmation: Check if the Relative Strength Index also shows bullish divergence, reinforcing the MACD signal.

For instance, on a Binance BTC chart:

• Enable volume bars below the price chart
• Overlay horizontal support lines at key historical lows
• Add RSI (14-period) and check for matching divergence
• Wait for a green engulfing candle to close above the divergence zone

Only when multiple conditions align should a trader consider entering a long position.

Common Mistakes When Trading Double MACD Divergence

Many traders misinterpret or misuse the double divergence signal. Common pitfalls include:

• Entering too early: Waiting for confirmation (e.g., price breaking above a recent swing high) prevents premature entries.
• Ignoring the timeframe: A double divergence on a 5-minute chart may be less significant than one on a daily chart. Higher timeframes offer more reliable signals.
• Overlooking market context: During strong bear markets or exchange outages, divergence may fail. Always assess overall market sentiment.
• Failing to set stop-loss: Even strong signals can fail. Place a stop-loss below the second low to manage risk.

Avoid assuming that two divergences guarantee a reversal. The crypto market is prone to manipulation and sudden news events that can override technical patterns.

Frequently Asked Questions

What is the difference between MACD histogram divergence and MACD line divergence?

The MACD histogram represents the difference between the MACD line and the signal line. Histogram divergence often appears earlier and is more sensitive. The MACD line divergence (between the fast and slow EMAs) is considered more reliable because it reflects broader momentum shifts. Traders often watch both for confluence.

Can double MACD divergence occur in an uptrend?

Yes, but it would be called a top divergence, not a bottom one. In an uptrend, double top divergence occurs when price makes higher highs but MACD makes lower highs, signaling weakening bullish momentum and potential reversal downward.

How long should the interval be between the two divergences?

There is no fixed rule. The interval can range from a few hours on lower timeframes to several weeks on daily charts. What matters is that both divergences occur within the same downtrend structure and are clearly identifiable.

Is double MACD divergence effective across all cryptocurrencies?

It can appear on any crypto asset, but effectiveness varies with liquidity and volatility. Major coins like Bitcoin and Ethereum tend to produce more reliable signals due to higher trading volume and less susceptibility to manipulation compared to low-cap altcoins.