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Relativestrength

What if RSI and EMA produce similar results?█ What if RSI and EMA produce similar results? In the world of trading , technical indicators play a crucial role in making informed decisions. One such indicator is the Relative Strength Index (RSI), and another is the Exponential Moving Average (EMA). Both of these indicators have been widely used by traders to analyze market trends and make predictions about future price movements. However, it has long been a topic of debate among traders as to which of these two indicators is better. █ What if RSI and EMA produce similar results? We wanted to determine the relationship* between the RSI and the EMA, specifically examining the hypothesis that when the RSI crosses above the value of 50, it returns similar results as when the price crosses above a certain length of an EMA. Similarly, when the RSI crosses below the value of 50, it returns similar results as when the price crosses below a certain length of an EMA. Our goal was to determine whether the RSI and EMA were related* in any way. █ Our Simulations We designed a series of simulations to compare the accuracy of the RSI and EMA in predicting market trends. The simulations were designed to test the assumption that the RSI and EMA were equal* in terms of accuracy in predicting price movements. █ Our definition of "predict price movements." If RSI crosses above the value of 50, there is a higher likelihood of a bullish move. If RSI crosses below the value of 50, there is a higher likelihood of a bearish move. █ Our assumption for this study When the RSI crosses above the value 50, it is equal* to when the price crosses above a certain EMA length, and when the RSI crosses below the value 50, it is equal* to when the price crosses below a certain EMA length. This assumption had never been tested until our team decided to put it to the test. █ Results To our surprise, we found a strong relationship* between the RSI and the EMA. We discovered that when the RSI crosses above the value of 50, it returns similar* results as when the price crosses above a certain length of an EMA. Conversely, when the RSI crosses below the value of 50, it returns similar* results as when the price crosses below a certain length of an EMA. The assumption was accurate and that the correlation* between the RSI and EMA was 1, indicating that the results of both indicators were highly consistent. This means that there is an EMA length that performs exactly* the same as the RSI in terms of predicting market trends. Validity Checks We stored crossover values for both RSI and EMA in 2 different arrays, and by running the following tests, we could conclude our findings. Correlation Check The correlation between RSI and EMA provides insights into the relationship between the two arrays. Array Size Checks The "diff" tells us how different the sizes of the two arrays are. If the size of both arrays is the same, "diff" would be 0, indicating that the two arrays have the same number of elements. Percentage Check The percentage difference between RSI and EMA is a measure of the similarity between the two arrays. A percentage difference of 0 indicates that the two arrays are the same size, while a higher percentage difference indicates that the two arrays are different in size. Ratio Check The ratio represents the relationship between the two arrays, in terms of the sum of their elements. If the ratio is equal to 1, it means that the sum of the elements in the two arrays is the same. The higher the ratio, the more the elements in RSIa are relative to the elements in EMA. The lower the ratio, the less the elements in RSI are relative to the elements in EMA. █ What is the exact relationship between the two indicators? After further testing and analysis, we discovered that the length of the EMA that returns results similar* to the RSI is given by the formula: "2* RSI Period - 1". This formula provides traders with a clear, scientific method for determining the length of an EMA that will return results similar* to the RSI. █ What does it mean for Traders? The study has provided valuable insights into the accuracy of RSI and EMA. It has shown that both indicators are approximately equal in terms of accuracy and that traders can use either one without having to sacrifice accuracy. This means that traders can choose RSI or EMA, depending on their personal preferences and trading style. █ Conclusion Our study has shown that when the RSI crosses above the value of 50, it returns similar* results as when the price crosses above a certain length of an EMA. Similarly, when the RSI crosses below the value of 50, it returns similar* results as when the price crosses below a certain length of an EMA. Furthermore, we have discovered the exact* relationship between the RSI and EMA, given by the formula "2 * RSI Period - 1". These findings provide valuable insights for traders and demonstrate the potential for data-driven approaches in trading. We showed that the RSI and EMA were highly correlated*, indicating that the results of both indicators were highly consistent*. This knowledge can save traders time and effort, as they can use one indicator to validate the results of the other. ----------------- Disclaimer *Our results are approximate. We encourage you to test the assumption yourself. We do not guarantee that you will get the same results. This is an educational study for entertainment purposes only. The findings/results may or may not be true. The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
OANDA:DE30EUREducation
by Zeiierman
20
$IBKR forms weekly shark pattern NASDAQ:IBKR may be one of the leaders of this sector. Back in February of 2022, the relative strength ration with AMEX:XLF showed a bullish divergence against the stock's price; soon after, the stock bottomed and since has rallied +50%. The $80 level is key and the price has formed a shark pattern near it. As the stock is in an uptrend, I'll wait for the breakout above $83.20. For a daily analysis, please refer to the link I left of one of the analysts that I follow closely.
NASDAQ:IBKRLong
by dpuleo19
Educational (divergence + volume)Hi guys, in order to spot a divergence you should be careful which timeframe you're looking at. for example in the left picture, the daily timeframe is showing higher highs in price (at each candle) and lower highs in RSI (at each candle). but note that these are not highs and lows and as long as you can't find signs of accumulation and distribution in highs and lows (as long as there's no valid consolidation) you can't name them as highs and lows. so there's no divergence. but in the lower time frame (what is shown is 4h) you can see it more clearer that for every candle in the daily time frame, you have a specific trend in the 4H timeframe. so you can name them as highs and lows and yes, there is a divergence now. also, keep in mind that in the lower timeframe. every time you're making a new high in rsi, you should expect it to be more volatile and be more sensitive in a way that in the next new rsi high, you have less time spent in the overbought area. The next part is about the volume profile. you have less resistance in front of the price movement where there is less volume traded in the past. BUT NOT ALWAYS! less trades made in the past in an area means two things: 1- you can expect the price to move faster and sharper and take less time in that area 2- if the price wants to make a low or high or a pattern, it's less predictable and there's more chance of wrong analysis and fake patterns. Feel free to leave any comments and ask questions!
Education
by Finnovin
Cant wait for price to stop ranging? Do thisFirst of all you are going to need this indicator Its the Heiken Ashi Algo Oscillator. Click the image below There are times when price is ranging. When this happens you simply need to see what is the channel where the RSI values are hitting and you want to know WHEN is the RSI breaking out of that channel In this oscillator the HIGH and LOW part of the RSI Range is the +10 and -10 If price is ranging in between as it is consolidating you dont want to sit there for several hours. So in this video you can see how to set an alert telling you when the RSI breaks out of the RANGE. This way, once the alert is set, you can go live life......... See you next time at the CoffeeShop
Education
by CoffeeshopCrypto
2
EURUSD & DXY: A BEAUTIFUL INVERSE RELATIONSHIP / FIAT / FIBDESCRIPTION: In the chart above I have included a MACRO analysis & side by side comparison of EURUSD & DXY. POINTS: 1. DEVIATION of 0.075, found with HIGHEST HIGH & LOWEST LOW & then dividing by 2 to find a MEDIAN & so on for remaining points in between. 2. EURUSD price action is in a current downtrend getting ready to test 1ST TARGET. 3. NOTICE how TARGETS for DXY & EUROUSD coincide. 4. RSI is currently over extended for EUROUSD & has seen its squeeze from previous oversold levels. *IMPORTANT: When both price actions come to touch they either float in same channel before separating again or completely blow through one another. SCENARIO: With DXY's current bearish momentum this can be a bullish factor for EURUSD as they have a clear inverse behavior and vice versa. FULL CHART LINK : www.tradingview.com FOREXCOM:EURUSD TVC:DXY
by DGSTBROKERACC
BTC Bottom Finder with RSI 📉Hi Traders, Investors and Speculators 📈📉 Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫 I'll be exploring a few scenarios for a potential Bitcoin bottom. In today's analysis, I make a use of Technical Indicator the RSI (relative strength index) over a long period of time, in other words a macro view. For more data that goes back further, I'm using BTCUSD instead of BTCUSDT. The RSI is trading in the historic oversold zone, but as we can see during the bottom of end 2014- beginning 2015, another leg down into the oversold zone is possible before continuing back upwards. This is indeed the scenario that I would be expecting, considering we have already tested this zone once but with talks of a global recession in 2023, we could see another leg down to support zone $11K before the final accumulation phase ends. I am by NO MEANS predicting the bottom date; just a simple overview that BTC is generally accumulated at a good price around this zone. Keep your eye on these 4 altcoins that have great upside potential during 2023, possibly even during a bear market as they are prone to pump and dump untimely 👀 XLM and DOT XRP and LTC _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
BITSTAMP:BTCUSD
by CryptoCheck-
32
Early entry in small cap health services, $MEDPSince late 2021 NASDAQ:MEDP is being forming a head & shoulders base with pivot buy above $230. This is the beahvior of a potential leader. It shows when comparing it against the AMEX:IWO as is still in a downtrend. The play for me would be to buy 1/2 or 1/3 of a position just above yesterday's high with a STOP-LOSS below $196. And then add at the $230 pivot. Medpace Holdings is ranked #1 in its industry by IBD. I recomend to also check NYSE:VPG which is also setting up. Its being hard for small caps to get demand as the indices are still in downtrends making the sentiment stay bearish. But as JC Parets always likes to remember, "is a market of stocks, not a stock market".
NASDAQ:MEDPLong
by dpuleo19
DAX40 Break out or fake out?Gm Today we opened DAX,with a gap which has been closed few hours later, and now we’re looking at price action near psychological level - 14 000. Bullish: (Higher low and support at point of control? ~13885?) In this moment I’m checking if price action forming triangle pattern and if it could break out and boost price from current level to ~14160 and even ~14220 where for me is a key level resistance point at this moment. Relative strength index line tested SMA from above and it’s going upward direction, but i have attention to lower times frames which do not give me right signs (RSI should cross SMA -15m/30m, bearish engulfing bar at 15m wasn't right sign.) Still waiting for more bullish confirmations in short term on price action. Bearish: In the other hand we have price action rejected at 0.618 fibonacci level and if this a local triangle formation it could get back to 13870 where was prominent demand, and as we can assume – double bottom with a candle weak confirming value area low. We are still under moving average ribbon and momentum still pressure for downward. Short term: Lower than 0.381 fibo → price going down 13 880/ 13 800 Higher than 0.618 fibo → going up 14 150/ 14 300 My prediction for now is mostly downward. But first I’ll wait to see what happens at drawed white triangle edge line. Then what will have place at 13 880 and 13 800 price levels. Anyway I don’t expect to price go higher than 200 moving average at 1h timeframe.
XETR:DAX
by NightTerm
Relative Strength IndexThe Relative Strength Index is one of the most widely used tools in traders handset. The RSI is an oscillating indicator which shows when an asset might be overbought or oversold by comparing the magnitude of the assets recent gains to its recent losses. A common misconception is that the RSI draws a comparison between one security and another, but what it actually does is to measure the assets strength relative to its own price history, not that of the market. The Relative Strength Index is useful for generating signals to time entry and exit points by determining when a trend might be coming to an end or a new trend may be forming. It weighs the prices upward versus downward momentum over a certain period of time, most often 14 periods, thus showing if the asset has moved unsustainably high or low. The RSI is visualized with a single line and is bound in a range between 1 and 100, with the level of 50 being considered as a key point distinguishing an uptrend from a downtrend. You can see how the RSI is plotted on a chart on the following screenshot. J. Welles Wilder, the inventor of the Relative Strength Index, has determined also two other fundamental points of interest. He considered that an RSI above 70 indicates that the asset is overbought, while an RSI below 30 suggests an oversold situation. These levels however are not strictly set and can be manually switched, according to each traders unique trading system. Trading platforms allow you to choose any other value as overbought/oversold boundary apart from the conventional levels. How is RSI calculated? The formula is as follows: RSI = 100 – Where the RS (Relative Strength) is the division between the upward movement and the downward movement, which means that: RS = UPS / DOWNS UPS = (Sum of gains over N periods) / N DOWNS = (Sum of losses over N periods) / N As for the period used for tracking back data, Wilders original calculations included a 14-day period, which continues to be used most often even today. It however can also be a subject to change, according to each traders unique preferences. After the estimation of the first period (in our case the default 14 days), further calculations must be made in order to determine the RSI after a new closing price has occurred. This includes one of two possible averaging methods – Wilders initial and still most commonly used exponential averaging method, or a simple averaging method. We will stick to the most popular approach and use exponential smoothing. The UPS and DOWNS for a 14-day period will then look like this: UPSday n = / 14 DOWNSday n = / 14 What does the RSI tell us? here are several signals that the Relative Strength Indexs movement generates. As we said earlier, this indicator is used to determine what kind of trend we have and when it might come to an end. If the RSI moves above 50, it indicates that more market players are buying the asset than selling, thus pushing the price up. When movement crosses below 50, it suggests the opposite – more traders are selling rather than buying and the price decreases. You can see an example of an uptrend below where the RSI remains above 50 for almost the duration of the move. However, do keep in mind to use the RSI as a trend-confirmation tool, rather than just determining the trend direction all by itself. If your analysis is showing that a new trend is forming, you should check the RSI to receive additional confidence in the current market movement – if RSI is rising above 50, then you have a confirmation at hand. Logically, a downtrend has the opposite properties. Overbought and oversold levels Although trend confirmation is an important feature, the most closely watched moment is when the RSI reaches the overbought and oversold levels. They show whether a price movement has been overdone or it is sustainable, thus, indicating if a price reversal is likely or if the market should at least turn sideways and see some correction. The overbought condition suggests a high probability that there are insufficient buyers on the market to push the asset further up, thus leading to a stall in price movement. The reverse, oversold, level indicates that there are not enough sellers left on the market to further push prices lower. This means that when the RSI hits the overbought area (in our case 70 and above), it is very likely that price movement will decelerate and, maybe, reverse downward. Such a situation is pictured on the screenshot below. You can see two rebounds from the overbought level with the first move being extraordinary strong and bound to end with a price reversal, or a correction at least. . Having noted that prices tend to rebound from overbought/oversold levels, we can therefore reach the conclusion that they tend to act as support/resistance zones. This means that we can use those levels to generate entry and exit points for our trading session. As soon as the price hits one of the two extremes, we can use the Relative Strength Index to confirm a probable price reversal and enter an opposite position, hoping that prices will reverse in our favor. We can then set the opposite extreme level as a profit target.
Education
by FOREXN1
27
JNJ Buy Long on StrengthJNJ fundamentally is a cross between Big Pharm and Consumer Staples Recent Earnings were solid not spectacular but the latter is not expected here. Technically, JNJ climbs higher without much volatility, At the moment it is rising in a small cycle within the supertrend. Strength is increasing and some bearish momentum is exhausting. This is a low-beta stock and it does not react much to the larger broad market. I see this as a good time for a LEAP option for early 2024 at a strike 15% above the current price.
NYSE:JNJLong
by AwesomeAvani
$TSLA call trade idea updateThe trade idea I presented in my previous Tesla post (linked) did not work because price went lower on Thursday and pulled RSI down below 35 (orange rectangle). My initial idea on 16 Nov. was for RSI to move higher from 35 as price rose. Instead RSI fell and stayed below 40 for two days (remember this is a 30m frame), until the green candle in the final Friday hour. After two days of very little price movement, which is quite unusual for this stock, stochastic %K(10) gave a sign of strength (yellow arrow) in the final hour Friday. Yellow box marks 2-3 candles that create the stochastic spike Notice the candles in Friday's box seem insignificant, except for a higher close, yet %K shows the strength. To the left, there is a yellow arrow marking a %K spike that matches with a very bullish candle. Price continued to gradually rise over the next four days. However looking at RSI below 30 on 9 Nov, I expected it to stall under 65 for a reversal. Now price has returned to make new lows but closed above 180, which is a good sign. Along with the %K spike on Friday, RSI moved over 40 but has yet to cross into bullish territory. I am looking for a candle close over the downtrend line, ideally early Monday, that pulls RSI over 50. If Friday's %K stochastic sign is supported by further buying, then RSI should, Mon-Tues, move over 67 and stay over 50. If price spends time struggling under 180 during the first half of Monday or quickly makes a new low, then this trade design is completely negated and I may look for puts down to 160.
NASDAQ:TSLALong
by OptionsRising
39
QQQ / NDX - more upside in near termQQQ broke above a minor neckline @ 284.50 last Friday and looks set to head higher in the coming days towards the 200 day moving average cum trendline resistence around 308-313. The odds of QQQ (NDX) reaching this level has increased as it is now taking the lead among the 3 indices (namely DJI, SPX and NDX). This means traders are now in "Risk-On" mode and piling into the more "speculative" sectors (namely Techs). However, the bigger picture is still in a downtrend and we do not know if the bottom is already in (until on hindsight!). Market could also go into weeks/months of sideways consolidation (just to please the FED lol). In general, mass layoffs by big companies could be a hint that the worst is over (esp for the stock concerned). However, we are also in a tricky situation that an aggressive market recovery might not bode well for inflation. Hence, anything is still possible at this point, waiting for clearer TA signs especially from the big Techs (FAANG). Meanwhile a lot of smaller stocks have already turned the corner. Hence, I'll be flexible. Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NASDAQ:QQQLong
by Juliac
5
GLAND PHARMA, TOUCHED ITS IPO PRICE!!after its recent quarterly results it fell a lot. its a very good stock for the swing trade. i have mentioned its targets and they are good support for those earlier a month ago, i had posted its 5 waves. and this time i have extended it till its IPO PRICE. its a bit sad, that it came down this low. but its good to buy in dip. i am aiming for the targets mentioned. do check he trend line drawn in RSI indicator too. the stock has touched its bottom, and one can do momentum investing till the stock consolidates in the future.
NSE:GLANDLong
by raghavchoudhary2016
AIT - Buy the dipsAIT first gapped strongly of a long term sideway consolidatin on 11 Aug (earnngs beat) but soon gave back all the gains as it started another round of consolidation (this time forming a rounded bottom). It is not uncommon to see "false/failed breakup" especially during periods of uncertainties in overall market. What is important is to note the "relative strength" of the stock in comparison to the index. The cup consolidation was forming with a higher low (on weekly) while S&P500 was making new lows, not to mention that AIT is also well above it's 200day Moving Average, showing good relative strength to the market. AIT finally broke out of a cup consolidation last Friday, probably in anticipation of earnings that is expected out on 3 Nov. There is a chance that the stock could continue to go higher with it's new support @140, or, it could once again attempt another smaller pullback, this time to form the "handle" of the cup that was formed. I would put initial stop loss just below 136. Let's see what happens. Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NYSE:AITLong
by Juliac
Dow Jones Industrial Average relative strength on the riseThe overall US equity market is still having a hard time stabilizing and catching its footing, however, if we examine the major US indices closer we do notice more and more relative strength coming out of the Dow Jones Industrial Average. This past week it never took out its September lows, the MACD momentum oscillator continues to climb aggressively, and on Friday we remained in the top 1/3 of Thursday's bullish engulfing bar. I started a position on Thursday and will keep a tight leash risk managing it going forward. More notes on the chart.
AMEX:DIALong
by EvanMedeiros
Is Huobi Token Megaphone Pattern Bullish or Bearish?Over the past 3.5 months, Huobi Token (HT) has been developing a megaphone pattern, also known as the broadening pattern. The pattern is neither bullish nor bearish, but it hints at a period of heightened volatility as long as HT's price remains trapped inside the megaphone support and resistance levels. HT Megaphone Pattern The megaphone pattern can be recognized by successive higher highs and lower lows. On the price chart, this pattern is visible by two diverging trendlines. Usually, the pattern marks a period of high volatility with no clear market direction. HT's price is testing the upper resistance trendline of the megaphone pattern around the $7.10 level. RSI Oscillator After the recent sharp rally, HT's price is greatly overbought. The Relative Strength Index (RSI) has reached 84, its highest reading since February 2021. Fears of the rally losing momentum are justified, as other technical factors are calling for a pause. Aside from extreme overbought levels, HT's price is also battling the key 200-day simple moving average. 200-Day Simple Moving Average While we broke above the 200-day simple moving average, it remains to be seen how this will play out within the megaphone pattern. For a fundamental shift in the market sentiment, we need multiple daily closes above the 200-day SMA. The current daily candle already shows signs of rejection at the megaphone resistance trendline, which may be another sign that, in the short term, the bullish momentum is running out of steam. Looking forward: To the downside, the first support area is the $5.00 big psychological level. A daily break and close below $5.00 will eventually open the door for a retest of the lower support trendline.
H
by cryptohopper
2
Elrond Bullish RSI Divergence Calls For at Least $10 RallyElrond (EGLD) has printed a bullish RSI divergence that supports more upside, at least until the next resistance around the $63 level is retested again. Additionally, Elrond is showing relative strength compared to the overall cryptocurrency market. These two technical factors combined offer a short-term bullish outlook for the Elrond price. Bullish RSI Divergence A strong bullish divergence between EGLD and the Relative Strength Index (RSI) oscillator was observed at the bottom of the current range near the $47 support level. The rally that emerged afterward doesn't seem to be running out of steam. Moreover, the price has developed the bullish RSI divergence in multiple time frames, indicating a potential bigger bounce. The path of least resistance is to the upside, as there are no clear resistance levels until the area between $63 and $65. EGLD Relative Strength Another divergence between the EGLD price and the Altcoin Index shows that Elrond is stronger than the overall crypto market. While EGLD's price broke above the mid-September high, printing a higher high, the Altcoin index continues to trade below its mid-September high. The divergence between EGLD and the Altcoin index may be just a short-term anomaly. Because we're still trading within a bearish cycle, this may be just a pullback, and sooner or later, EGLD could align back with the overall market direction.
by cryptohopper
1
ETSY - Worst is probably behind usETSY is now trading way above it's June's low, which means it has good relative strength compared with the S&P500. Even so, it could still be volatile, having 61.8% since hitting a swing high (B) on 16 Aug. It has been trading in a downward channel (extended "flag") for the past 6 weeks and it looks like an eventual break above this "flag" cold be near . When it does (break up), it will be further validation that this stock is on it's way to recovery. Then again, we just never know if FED will come in again to pull the brakes. Hence , be optimistic but also realistic and have a stop loss in place. Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NASDAQ:ETSYLong
by Juliac