RSI divergence.

vishalbheda111 · #1 24th September 2007, 12:11 PM

hi!!

RSI gives a warning signal about the ongoing trend when it gives a diveregnce.The divergence can be bullish or bearish.
But the main thing that confuses me is,if suppose one is analysing daily charts & we a divergence in price & RSI.But how many days of divergence shall be considered valid,because in daily charts we cud easily find a divergence if see prices of the same stock a month or two months before & as same in weekly charts.
I need help as how many days RSI divergence in daily charts & weekly charts should be payed attention & take it seriously.

Thank you,
REGARDS,
Vishal.

bvpraveen · #2 24th September 2007, 03:04 PM

Hi,

You may also read the posts from 26 till the end in the below thread:
http://www.traderji.com/equities/128...r-moves-3.html

Beware that, everything is relative. For eg. a flat in price(or sideway movement in simple terms) can easily create a divergence in RSI.

Praveen.

winstonn · #3 24th September 2007, 09:36 PM

Hi Vishal,

divergences are sometimes good, however they alone must not be primary tools for taking a trade.

Tell me if you wanna know about a FRENCH person who does not know hindi at all , and u ask him in hindi? you need to learn french first!

in the same way there is a language of markets! please try to concentrate on true market language. Market structure is one of the languages that we can learn and profit a lot! Howere knowing just A to Z is not enough, you need to learn the framing of sentences and get the good communication between you and market so that you understand what it speaks.

ahh!! is it confusing? please read Saint's post and u will know wht i wanna say!

* my way of using RSI or any other divergence is this:

spot the higher time frame trend.
look for lower time frame opposite trend, spot divergence in lower time frame and trade according to higher time frame trend.

eg. if 60 min charts are clearly in uptrend, go to 5 min time frame and only take the bullish divergences and vice-a-versa.

In fact Big boys have very simple methodology to trade , they only see multiple time frames and increase their success rate amazingly! However, today indicator based trading and their modifications are facinating people so much. But markets keep on changing, on every time frame from 5 min to monthly! these indicator based systems dramatically change with changing periods. only wht not changes is the MARKET LANGUAGE on all time frames! Learn to learn it!

Take care,
AUM,
Winston

sunil saranjame · #4 24th September 2007, 10:26 PM

Hey Winston ! That was a good one.

Where are you ? Saw you after a long time! No more wolves to track?

ss

uasish · #5 24th September 2007, 10:29 PM

Quote:

Originally Posted by sunil saranjame

Hey Winston ! That was a good one.

Where are you ? Saw you after a long time! No more wolves to track?

ss

I second Sunil's post,is your exams over ?

sunil saranjame · #6 24th September 2007, 10:32 PM

Hi Vishal,

Check this link, it has good articles on how to interpret RSI.

ss

satya_pinku2003 · #7 24th September 2007, 10:46 PM

Quote:

Originally Posted by winstonn

Hi Vishal,

divergences are sometimes good, however they alone must not be primary tools for taking a trade.

Tell me if you wanna know about a FRENCH person who does not know hindi at all , and u ask him in hindi? you need to learn french first!

in the same way there is a language of markets! please try to concentrate on true market language. Market structure is one of the languages that we can learn and profit a lot! Howere knowing just A to Z is not enough, you need to learn the framing of sentences and get the good communication between you and market so that you understand what it speaks.

ahh!! is it confusing? please read Saint's post and u will know wht i wanna say!

* my way of using RSI or any other divergence is this:

spot the higher time frame trend.
look for lower time frame opposite trend, spot divergence in lower time frame and trade according to higher time frame trend.

eg. if 60 min charts are clearly in uptrend, go to 5 min time frame and only take the bullish divergences and vice-a-versa.

In fact Big boys have very simple methodology to trade , they only see multiple time frames and increase their success rate amazingly! However, today indicator based trading and their modifications are facinating people so much. But markets keep on changing, on every time frame from 5 min to monthly! these indicator based systems dramatically change with changing periods. only wht not changes is the MARKET LANGUAGE on all time frames! Learn to learn it!

Take care,
AUM,
Winston

Thanks

Regards
Satya

winstonn · #8 24th September 2007, 11:06 PM

Hi sunil and asisda,

exams are over long back, but am busy in other activities! finding hard to research ! time constraints.

well, miss u all,

AUM,
Winston

winstonn · #9 25th September 2007, 10:38 AM

Hello everyone here!

here is a simple divergence trade based on time frame.
i have used two time frames. lower one is 10min and higher is 60 min.
10* 6 = 60!!!!

see the 60 min chart of nifty was clearly in uptrend.
than go to lower time frame 10 min, and spot divergence. I have used RSI and MACD.

when both give bullish divergence, i wait for MACD to cross zero line and take a trade. Stops are placed below important swing low on Bar closing basis.

For profit booking, i have marked troughs in red line, unless the trough is not broken by succeeding trough, my positions are still in the market!

Do opposite for short trades.

The beauty of this method is that entry is conservative since the main principle is buy on pullbacks and short on rallies. With good mm, i am sure lot can be earned!

Hope you enjoyed this simple and powerful method.

AUM,
Winston

vishalbheda111 · #10 25th September 2007, 10:45 AM

hi!!

That was a nice theory & good one Winstonn.