Bullish Momentum Divergence

Bullish momentum divergence occurs when an asset price makes a lower low while an indicator, such as the Relative Strength Index or a momentum oscillator, makes a higher low. This discrepancy suggests that the downward pressure is weakening, even if the price is still falling.

It is a classic signal used by traders to anticipate a potential reversal to the upside. In the crypto space, this is often seen before significant rallies, as selling pressure exhausts itself.

Detecting this requires careful observation of both price action and technical indicators simultaneously. It is not a guaranteed signal but a strong indication that the market sentiment might be shifting.

Traders often look for this pattern to identify undervalued assets or to prepare for long entries in derivative contracts.