Adjustments for Better ReadingsMany traders rely on technical indicators to identify opportunities for profit—that's the whole point of this game. Whether it’s scalping, day trading, swing trading, or shorting the market, most trading decisions are based on indicator readings—be it a single indicator or a combination of several.
But here’s the truth: not all traders truly understand what an indicator is. They don’t grasp its nature—let alone the fact that this nature can be adjusted.
Those who don’t understand how or why an indicator works often find themselves in stressful and uncomfortable situations. It’s no coincidence that we often hear the common phrase: “Only 1% of all traders succeed, while 80% blow their accounts, and the remaining 19% barely break even.”
Why? Because the elite traders understand something most don’t:
Whether an indicator is leading or lagging, it can be customized to behave differently across different timeframes.
These adjustments can be found in the settings section of every indicator.
Let’s take the Relative Strength Index (RSI), which I’ve mentioned in previous ideas. Some of you may have noticed that my RSI plot looks different from yours. That’s because I don’t use the default 14-period RSI, which averages out the last 14 candles.
RSI is naturally lagging by default—but that doesn’t mean it can’t be trusted. In fact, with the right adjustments, that lagging nature can become leading. Learn how to do this. Push yourself. Educate your mind. Master this, and you might just find yourself among the top 1%.
Markets react to signals—signals that are often hidden in plain sight, created by the big players who always leave behind footprints. This is the trader’s true skill: seeing the whole picture.
A good friend once told me: Be a detective.
Now let’s go to the chart.
We clearly see a bearish strength unfolding.
Not only is the 9-period RSI plot trending below the yellow 28-period Weighted Moving Average (WMA), but we also observe a healthy continuation of the downtrend, confirmed by the WMA itself.
Using a 9-period RSI gives faster signals, while the 28 WMA offers smoother confirmations. This combo is applied on the daily timeframe—but every timeframe has its own ideal settings.
Now, when the RSI plot trends above the WMA, this can act as a potential reversal signal or even a confirmation of a trend change, depending on the broader market structure and volume context. It's not just about the crossover—it’s about what follows next. That’s where the detective work begins.
What do we see today?
Looking solely at the daily timeframe, the downtrend seems far from over. But to analyze it professionally, we must wait for the candle of Friday, June 6th, 2025 to close.
Switching to the lower timeframes, we see something interesting—a sort of bullish dominance unfolding during this incomplete trading day. But the real question is: Is it actual dominance?
Let’s break it down:
We have a clearly formed Head & Shoulders pattern.
The bearish Marubozu candle from June 5th made a new lower low (LL).
But—it did not close below the key swing low at 100.718.
Therefore, the Head & Shoulders pattern is not confirmed—it hasn’t broken and closed below that swing level.
So what’s happening in the lower timeframes?
In the 4-hour timeframe, we’re seeing a real-time crossover above the WMA (though the session isn’t closed yet).
In the 1-hour timeframe, the crossover has already occurred.
Now, such a crossover—where the RSI plot moves above the WMA—can often act as an early signal for a reversal, or at the very least, indicate a strong pullback. But don’t take it at face value—context is king. This is why we pair it with other signals like divergence, price action, and volume behavior for confirmation.
Across the 4H, 3H, and 1H timeframes, we’re observing this bullish pullback, yet it’s accompanied by an RSI Hidden Bearish Divergence (see: Macro Noise vs Micro Truth: The Art of Hidden Divergences).
Is this pullback a true reversal?
According to Volume Spread Analysis (VSA) (read: VSA vs BTC: Into a Bearish Scenario or Not?), a new narrative is emerging—but not without contradiction.
Price is climbing, yes.
But bullish volume spikes are declining, supporting our RSI hidden divergence. This volume-price disagreement is a clue.
What will reveal the truth?
Today's closing candle.
If price action (PA) creates a higher high (HH) but RSI creates a lower high (LH) → Bearish Divergence
If RSI makes a HH but PA creates a LH → Hidden Bearish Divergence
And for those of you who truly understand market structure:
The 100.718 level was a buy opportunity to secure profits.
If you caught that—congratulations. You’ve done your homework.
Now, you can sit back, relaxed, and wait for the next signal.
The market is a breathing organism. If you’re in sync with it—you’ll feel it.
And for those who believe there’s more to learn—but are struggling to find answers—there’s no shame in asking questions.
Till next time, take care—and trade wisely.
P.S. RSI plot, WMA, candlestick patterns, and Volume Spread Analysis (VSA)—when combined and used properly—can become a powerful toolset. For those willing to go deeper, they’re more than enough.
