Hi,
Since the markets are not in our favour and since I have lot of time on my hand I am trying to understand how different indicators work. I believe that understand them and their mechanism will help us use them more efficiently. Today I have more or less understood how RSI formulae works and that too thanks to stock charts. I always thought average gains would be average number of ups divided by those many days but they say it is average gains and declines divided by the number of days RSI is being plotted for. So in 14 day case advances and declines will be divided by 14.
What I want to understand is how divergence occurs in RSI and also with MACD in relation to price charts. If price goes up RSI would go up. What creates a divergence. I am sure the answer would be very simple but my brain refuses to work at this point of time.
Rgds
Rahul
P.S I hope we really do not need a mathematician to undertstand this and the answer would be much more simple than i think.
Since the markets are not in our favour and since I have lot of time on my hand I am trying to understand how different indicators work. I believe that understand them and their mechanism will help us use them more efficiently. Today I have more or less understood how RSI formulae works and that too thanks to stock charts. I always thought average gains would be average number of ups divided by those many days but they say it is average gains and declines divided by the number of days RSI is being plotted for. So in 14 day case advances and declines will be divided by 14.
What I want to understand is how divergence occurs in RSI and also with MACD in relation to price charts. If price goes up RSI would go up. What creates a divergence. I am sure the answer would be very simple but my brain refuses to work at this point of time.
Rgds
Rahul
P.S I hope we really do not need a mathematician to undertstand this and the answer would be much more simple than i think.