| Relative Strength Index (RSI) is a well
| |
| | approach is then to wait for the high of
|
| known and much used
| |
| | the weekly
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| momentum indicator. It was invented by
| |
| | bar that caused the Cycle10 reversal, to
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| J. Welles Wilder Jr.,
| |
| | be broken by a few points.
|
| a great technical analyst.RSI compares
| |
| | Depending on the risk tolerance, a
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| the magnitude of a stock or index's
| |
| | protective stop can be placed a
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| recent gains
| |
| | few points below the swing low or below
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| to the magnitude of it's recent losses
| |
| | the low of the bar which caused
|
| and that information is
| |
| | the weekly Cycle10 reversal. When weekly
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| turned into a number that ranges from 0
| |
| | MACD's signal line crosses it's
|
| to 100. A single
| |
| | moving average, a bullish trend reversal
|
| parameter is used, the number of time
| |
| | confirmation is given.Taking Profits
|
| periods for the calculation.
| |
| | Deciding when to take profits is often
|
| 14 periods is recommended by
| |
| | viewed as the most difficult
|
| Wilder.Common practical use of RSI in
| |
| | part of trading. I would consider taking
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| stock market timing is to measure
| |
| | profits, when the 38.2%,
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| the underlying strength of the market
| |
| | 50% or the key 61.8% Fibonacci
|
| and to determine if it's
| |
| | retracement levels (of the previous
|
| getting overbought or oversold. Wilder's
| |
| | bearish trend) are reached. It depends
|
| own recommendation was to
| |
| | on how overbought the market
|
| use 70 and 30 levels, to indicate an
| |
| | has become, when those Fibonacci
|
| overbought and oversold market,
| |
| | retracement levels are touched.
|
| respectively. If RSI rises above 30 it's
| |
| | Another, usually slower approach, is to
|
| considered bullish for the
| |
| | simply take profits when MACD
|
| stock or index. If the RSI falls below
| |
| | turns bearish again (MA crossover).The
|
| 70, it's a bearish sign.Bullish & Bearish
| |
| | odds for a successful trade would
|
| DivergencesStronger buy and sell signals
| |
| | increase if weekly MACD has just
|
| can also be generated by looking
| |
| | been through a bullish divergence
|
| for positive and negative divergences
| |
| | pattern formation first, before
|
| between the RSI and
| |
| | entering bullish mode (MA
|
| underlying prices. For example, a
| |
| | crossover).Other profit taking
|
| falling market index whose RSI
| |
| | suggestions are when weekly Cycle10 makes
|
| instead rises from a low point of 10 and
| |
| | a bearish
|
| back up to above 50. The
| |
| | reversal up in it's sell zone (closing
|
| underlying index will often reverse it's
| |
| | basis). A drawback with this
|
| direction soon after
| |
| | method, is that Cycle10 doesn't always
|
| such a divergence. Divergences that
| |
| | reach it's sell zone, before
|
| occur after an overbought or
| |
| | making a bearish reversal.Another good
|
| oversold reading, usually gives more
| |
| | point to take profits, is those times
|
| reliable signals.Center Line Break
| |
| | when the key 61.8%
|
| A bullish or bearish indication is given
| |
| | Fibonacci price level is reached and
|
| with readings above and
| |
| | Cycle10 at the same time is in it's
|
| below the 50 level. A reading above this
| |
| | sell zone. In this case a bearish
|
| center line indicates that
| |
| | Cycle10 reversal is not waited for.
|
| average gains are higher than average
| |
| | Any market wants to reach it's key 61.8%
|
| losses. A reading below 50
| |
| | Fibonacci zone, 60-70% of the
|
| indicates that bears are winning the
| |
| | time, before making a new trend
|
| fight. For confirmation of
| |
| | reversal.Short (Bearish) Entry
|
| bullish and bearish signals, some
| |
| | Parameters:
|
| traders look for moves above and
| |
| | Weekly MACD must be in bullish mode
|
| below 50, respectively.Below is the
| |
| | (closing prices).
|
| author's special indicator combination
| |
| | When daily RSI rises above 60, weekly
|
| and settings,
| |
| | Cycle10 must be in it's sell zone
|
| for short & medium term stock market
| |
| | (above 70) and make a bearish reversal
|
| timing.Daily Chart:
| |
| | on a weekly closing basis, before
|
| - 200 ema (exponential moving average)
| |
| | entry. Again, a less aggressive entry,
|
| - 89 ema (closing prices used for both
| |
| | is then to wait for the low of the
|
| ema calculations)
| |
| | bar which caused the Cycle10 reversal,
|
| - RSI set at 25 periods with horizontal
| |
| | to be broken by a few points.
|
| lines at 60 and 40Weekly Chart:
| |
| | A protective stop can be placed a few
|
| - Walter Bressert's Cycle10 plotted with
| |
| | points above the swing high or the
|
| horizontal lines set at 70 and 40
| |
| | high of the weekly Cycle10 reversal bar.
|
| - MACD plotted with Signal Time Periods
| |
| | When MACD's signal line crosses
|
| set at 5By the use of a 25 period RSI on
| |
| | it's moving average, a bearish trend
|
| a daily chart, in combination
| |
| | reversal confirmation is given.Taking
|
| with Cycle10 and MACD, plotted on a
| |
| | Profits
|
| weekly chart, larger tops and
| |
| | The same suggestions as for the Long
|
| bottoms can often be found. This special
| |
| | entries, it depends on how long you
|
| indicator setup can be a
| |
| | are willing to stay in the trade. When
|
| contributing factor for more accurate
| |
| | the 38.2%, 50% or the key 61.8% Fibonacci
|
| stock market timing, although
| |
| | retracement levels (of the previous
|
| no guarantees are given. Examples for
| |
| | bullish trend) are reached.
|
| 2005 are the significant April
| |
| | When weekly Cycle10 makes a bullish
|
| and October lows in the OEX, (S&P 100)
| |
| | reversal down in it's buy zone.
|
| where the RSI dipped below 40.Later in
| |
| | When the key 61.8% Fibonacci level is
|
| 2005 and so far in 2006, three RSI moves
| |
| | reached and Cycle10 at the same
|
| above 60 all alerted
| |
| | time has entered it's buy zone, without
|
| about important OEX peaks, in November,
| |
| | waiting for a bullish reversal.For your
|
| January and March.Below is how i use this
| |
| | profit taking decisions, the 89 and the
|
| as an alert system in my own technical
| |
| | 200 EMA, plotted on the
|
| analysis:By using this 25 period RSI,
| |
| | daily chart, can also be used as
|
| instead of the standard 14 RSI, some
| |
| | important resistance and support levels
|
| whip-saws will be filtered out. When RSI
| |
| | to be aware of.In general, not more than
|
| 25 climbs above 60
| |
| | 2-5% of the total trading capital should
|
| or falls below 40, odds are greater more
| |
| | be at
|
| significant tops and
| |
| | risk in any trade. This prevents the
|
| bottoms are forming, respectively. This
| |
| | trading account from being wiped out,
|
| part of the system acts
| |
| | when a streak of losses may occur, as
|
| as a warning, a trading opportunity
| |
| | can happen in any system.The trading
|
| shows up on the Long or Short
| |
| | strategy outlined in this article is in
|
| side and more attention is given.Long
| |
| | no way the "holy grail"
|
| (Bullish) Entry Parameters:
| |
| | of stock market timing. It's an opinion
|
| Weekly MACD must be in bearish mode
| |
| | of when important market tops and
|
| (closing prices).
| |
| | bottoms can be expected and hopefully be
|
| When Daily RSI closing readings falls
| |
| | useful information in this regard,
|
| below 40, (for a bullish entry
| |
| | a tool in the tool box, if you like.(c)
|
| consideration) weekly Cycle10 must be in
| |
| | Copyright Arild MyklebustArild Myklebust
|
| it's buy zone (below 40)
| |
| | publishes a Free Trader's Tips
|
| and make a positive reversal on a weekly
| |
| | Newsletter. Get Market & Indicator
|
| closing basis, before entry.
| |
| | Updates, Charts & Commentaries, Trading
|
| It's important to separate between the
| |
| | Tips, Systems and Ebooks delivered to
|
| daily and weekly charts used
| |
| | your email box. Get this free OEX & QQQQ
|
| for each indicator.A less aggressive
| |
| | Stock Market Newsletter now.
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