Trends, RSI

I am a big trend trader, but probably not as how other traders define this. In the strictest sense of this term, I am not, as I use a combination of things, which is my own blend of trading, but for all intensive purposes, I am a trend trader.

My trends are not restricted to price action, rather I look at trends in the following:

1. Price Action
2. RSI
3. Volume

Especially with RSI, I'm drawing my trends. For DOWNWARD action, connect the peaks. For UPWARD action, connect the valleys.

I know, a picture is worth a thousand words and though I will not write a thousand words on this topic, I'm not feeling inclined to draw you a picture or give you a visual example, so you'll have to just bear with me, or move on, but I think these tidbits o information are worth it.

BEARISH (Downward Trend):
- Connect Peaks on RSI
- Extend line to below oversold area down to 10ish
- If line is broken, it may test this, but if it begins moving up strongly, get out
- Look at various timeframes to see where you are in RSI. If you're already in very oversold territory, the likelihood of you staying in oversold lessens.
- Usually the best time to get in bearish is when you have at least 2 peaks that are sloping downward.
- Other good times to get in are when it tags that trend line and begins its descent down (this might look like a retracement or pullback on the price action)
- If you choose to get in STILL to the downside after it's broken this trend line DOWN, this needs to be for a brief period of time, because it's a matter of time it reverses. Quickly take profits or set closer stops to avoid bigger costs.

BULLISH (Upward Trend):
- Connect valleys of RSI
- Extend trend line to above 70, closer to the 90-100 range.
- If line is broken by price action moving downward, you can wait as often it tests that trend line, but if it moves downward strongly, you need to get out.
- The rest is the same but the reciprocal for bullish as bearish.

- What if price action is going sideways? Usually RSI will have at least a slight bias towards either the bearish or bullish. Look at the peaks and valleys. Are the peaks getting lower or higher as price action moves forward? If they are getting higher, then that is more bullish. If they are going lower, then it's bearish. Similar with valleys. Lower valleys signify bearish. High valleys signal bullish.
- What does volume say?
- Notice very slight differences. Let's say RSI peak = 69.71 and the next one is RSI peak = 69.53. That is LOWER, so tending towards bearish.
- RSI can go into compression patterns like wedges, pennants, rectangles, etc. Often breakouts ARE tested, but once it fails or pasts the test, go in whatever direction it goes in.
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