The RSI revisited

[chartist2004]

Triplepack,

welcome to the RSI admirers group.

Yes, I use the RSI as a trend indicator, with 40 and 60 as support and resistance values. While the RSI is below 60, and has moved below 40 recently, the trend is down. When the RSI is above 40 and has moved above 60 recently, the trend is up. ANything else, we are in a sideways market. To me, a move above 60 is bullish, below 40 is bearish. These are general guidelines.

I have looked at hidden divergences. Cardwell talks about divergences with a gap of 4 to 6 bars. I have rarely found such divergences, and when I did, they really provided very shallow moves. Hidden divergences with a large number of bars seperating them have given better indications.

To me, the use of RSI as a trend method + chart patterns on the rsi is the useful part of the indicator.

[Triplepack]

Hi chartist,

Yes, I agree with you, when you do identify an mdrp in short term
movements , by the time it has show itself with the 'hook' it most of the way down on it's move.However looking back over the recent dow index it has showed some great clues where it was going to move to with the price projection it indicates.
Often i can find price projections which hit it right on the nail.

I think like you it is probably more fruitful used on a longer time scale such as 60 mins for example. this can give some great targets but it is then down as always to your position
management. i.e. when the RSI goes above the pivot stop get out. The risk to rewards can be quite good which enables you to put a stop above the pivot point allowing a certain ammount of wiggle.

How have you found the effectiveness of the price projections ?

One addition to the useage of projections I've given a little thought to lately is to relate the swings with Fibonacci retracements. John Hayden shows this quite well in his book.
This has then pulled me down further into price patterns with harmonic relationships phew head spinninn now lol.

cheers

Triplepack

[janco]

Here is another thread about RSI in this forum:

http://www.moneytec.com/forums/_showthread/_s-/_threadid-7564

Rgs,

Janco

[Triplepack]

hi Janco,

Yes, I found that some time ago , looked like it was going to be a good thread but for some reason it was closed. didnt sem to be any abuse or anything bad going on there hmm wonder.

There is also a thread on this bbs started by Andrew Cardwells wife , nice to know he's about maybe he'll contribute.
He welcomes discussion on RSI according to his good lady,( she gives email address). but I think it may put him in a difficult position as he sells his course and it may not be appreciated by his former students.
Cheers

Triplepack

[chartist2004]

One of the major uses of the RSI is to identify the trend. As explained in my earlier post, I use the indicator (set to 14 bars) to decide if I should be a buyer, seller, or a sideways trend watcher.

The problem is, while the method is simple enough to apply visually, it is not easy to program it. This would qualify as an uptrend:
The RSI had moved above 60 in the last few bars. It is currently at 51. The last dip saw it reach 41, thus holding above the 40 support.

I am unable to code this as a mechanical alert / indicator.

Any suggestions ?

[amarnath]

Hi all

I hope some Mql programmer can help and modify it with some Ema filter looks better

[Triplepack]

Wouldnt that smooth out all the bumps ?

triplepack

[chartist2004]

IF we smooth the RSI with an ema or whatever, then the analysis changes. Divergences, Range Rules for resistance & support will no longer be valid.

The idea is to try and get the maximum out of the RSI, as it is.