Identifying Hidden Divergence on MACD - A Game Changer?

Hey folks,

I've been digging deeper into MACD lately, moving beyond the standard crossovers. I wanted to share a concept that's been really sharpening my analysis: hidden divergence. Most traders are familiar with regular divergence (price makes a new high/low, but the indicator doesn't confirm), but hidden divergence is a bit more subtle and, in my experience, often a stronger signal for continuation.

Here's the breakdown:

• Bullish Hidden Divergence: Price makes a higher low, but the MACD histogram (or MACD line) makes a lower low. This suggests that despite the price dip, underlying momentum is still building, indicating a potential continuation of the uptrend after a pullback.
• Bearish Hidden Divergence: Price makes a lower high, but the MACD histogram (or MACD line) makes a higher high. This implies that while the price might be struggling to push higher, the downward momentum is building, hinting at a continuation of the downtrend.

I've been spotting this on several altcoins during minor pullbacks in larger uptrends, and it's often preceded a strong bounce. For example, I saw bullish hidden divergence on $LINK's 4-hour chart yesterday just before it rallied about 8%.

What are your thoughts? Have any of you actively used hidden divergence with MACD? Any specific indicators you pair it with to confirm? Let's discuss!

Interesting point on hidden divergence! I've definitely found that to be true. Regular divergence often signals a potential reversal, but hidden divergence feels more like a confirmation that the existing trend has strong momentum behind it.

For bullish hidden divergence, I've noticed it can be a great entry signal when the price is already in an uptrend and pulls back to a higher low, while the MACD histogram also prints a higher low. It suggests the underlying buying pressure is still building.

Have you found any specific timeframes where hidden divergence tends to be more reliable for you?

That's a fantastic point about hidden divergence being a continuation signal. I've seen it play out so many times, and it's definitely less talked about than regular divergence.

For bullish hidden divergence, I agree, seeing that higher low on price with a higher low on the MACD histogram during an uptrend pullback is a powerful confirmation. It really shows the trend isn't losing steam.

I've found it to be quite reliable on the 4-hour and daily charts. What about you? Any specific timeframes you prefer for spotting this?