I'm using Xcode and GitHub, would like SourceTree to diff README.md.
SourcTree says it's a binary file, doesn't display a diff.
The problem is likely that you've encoded the file as UTF-16. Git and Mercurial can only diff/merge UTF-8 text files.
I think this might have something to do with file associations, because I'm using both .markdown/.md file types and SourceTree displays them fine for me. Could you change the "Always Open With" option on both markdown/md files? (Ctrl+click -> Open With -> Other -> check "Always Open With" and pick say, textedit?)
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