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Rsi_overbought

Overbought to Oversold: The Crucial Addition!Here's why most algorithms fail. They don't take into account the context you needed it to. Here's why it's hard to correct that: you need something OUTSIDE of the raw number-crunching that you're doing in order to understand what's happening. If you're very good at that, you're already a profitable trader to begin with! In that case, it can be discouraging to move to a different platform where, at least to begin with, you don't see yourself making any move into profitable territory any time soon. In this example, I used a raw "overbought to oversold" strategy that looks at RSI crossing from overbought/oversold to fair value to time exits and entries. The problem is, results vary widely. Sometimes, it is right 95% of the time for hundreds and hundreds of bars. Other times, it stops you out thirty times in a row. Whenever you see this type of erratic behavior, you know something outside of the stochastic nature of asset prices is playing its part. This is why you need to understand what you're doing; what you're coding, and why the results are what they are. What kind of indicator is RSI? When does it work, and when does it fail? When you realize RSI is an oscillating momentum indicator, it's not hard to figure out it does well when a stock is ranging, and does poorly if it's strongly trending. RSI can be seen hitting overbought a dozen times during a strong bull run without the price action showing more than a few small pull-backs along the way. Makes sense: it is essentially built to analyze what it thinks of price action if you'd assume that the price will stay within the same range, or is given time to consolidate after having broken out of a previous range. When you understand this, the answer to our erratic algorithm becomes clear. We need a trend indicator that stays flat enough when a stock is showing certain types of ranging behavior, but steep enough when it rallies for long enough or ranges so wildly during an erratic time that RSI won't measure it correctly. If we try to do this with a simple moving average, the problem you'll encounter is that it's either too reactive or too sluggish. You want to have some indication on the slope of the moving average, which indicates trend rather than momentum. The difference in slopes in the near term could be read as a form of "MACD", which is obviously momentum, but if you take it day-over-day, it more or less indicates the general trend direction. Now, we can see on the chart below how we're not trading when RSI is misrepresenting the "overbought" and "oversold" states because it failed to take into account price action and trend, while trading very accurately when the stock is ranging. That's a home run algorithm waiting to enter the next stages: adding optional functionalities, optimization, and a battery of backtests. Whether you want to build an algo, or trade manually, simply understanding how indicators can complement one another and how you can quantify your pre-existing intuition for "ranging" and "trending" without using complex variables and indicators beyond simple differences of moving averages can be hugely beneficial to your development as a trader. Hope you learned something and happy trading!
MIL:1ALVEducation
by ralphschraven
1
RSI and breakoutsIve noticed that when : 1The RSI hits below 30 on the 30min sometimes 1hr time frame 2Then goes up to just before 70 ...say 67 on the RSI 3Then drops again to 25-29 THAT'S A BUY I think that would indicate a breakout to the upside. The RSI will go up and down in wave patterns. This doesn't mean the price will follow. BE CAREFUL. So, if it has to hit 70 on the RSI but doesn't. Then drops ,all those people who FOMOed in are FOMOing out at a lower price bringing it up but with more volume. THIS IS JUST ME TALKING AND NOT ADVICE.
KEducation
by UnknownUnicorn5174798
ETHEREUM/BTC 😃 Opportunity 👍💡 Ethereum is the "safer" altcoin to diversify into if you want to compound your Bitcoin (without needing to trade on leverage)! Multiple Higher Lows on the daily timeframe shows Demand is eager to buy Supply at higher prices from previous bottoms. Price is testing its 200 Daily Moving Average, which is sloping up! RSI is oversold. MACD histogram is starting to converge... 🚨 Stop Loss below previous daily candlestick wick 0.0209-ish Risk to Reward 1:5
Long
by ChartCinema
2
ETC S/R Flip & RSI Divergence - discussion of accumulationGenerally this divergence suggests this is the top. Here we have *just about* broken down out of an ascending wedge (a bearish pattern). This support is now turned resistance and ETC will have to either a) consolidate sideways or decline to support or b) bounce back into this wedge and close inside it to continue its rise. However, ETC has just recently broken out of accumulation (it has been in a downtrend from 2017 hysteria of a peak of 45 dollars), and the primary trend is BULLish. Anyone shorting is up against over 3 years of constant selling and months of Ethereum Classic changing hands from weak to strong in accumulation!!! CONSIDER WHERE ARE THE SELLERS GOING TO COME FROM TO DRIVE THE PRICE DOWN AGAIN!??! In my PRIOR CHART I told people to BUY DIGP on BITCOIN CASH because of THIS REASON of NO MORE SELLERS. however, I WAS WRONG and BITCOIN CASH did indeed DECLINE from 0.03 to 0.026soemthing - Daily chop that a short term trader woould be cosnider a losing of money and tying up of capital, but if you HELD and sold off at the recent breakout you could have turned 10 BCH from a 0.3 BTC to a 0.4 - 0.45! not bad for someone want ing a safe trade!! I have seen multiple LINEAR charts showing with very learned technical analysis that Bitcoin has yet to complete a full C-eliot wave. However on a LOGARITHMIC chart (which you SHOULD be trading off, because we are interested in % return, not dollar amounts) and stock-to-flow, model, Bitcoin is still in a Buy zone and a further decline past the 6K mark looks increasingly implausible. This is crypto and anything and everything can and does happen, just hedge all your bets! I will NEVER buy ETHEREIUM AGAIN because they are planning to move to PROOF OF STAKE which is fraught with Problems, ETHEREUM CLASSIC is the ONLY ETHEREUM and CRYPTO CAT TOY DIGIMON CHAIN is just a LEGO BLOCKCHAIN IMITATION!!! Thank you for Enjoy my SATIRE TECHNICAL ANALYSIS NOT FINANCIAL ADVICE
by Milky_Udders
2
GBPUSD Jan 22, 2020This pair is about to drop down to strong support which has been tested 3 times (in my opinion) and therefore we have a strong support level. We can see on the 240-minute (4 hours) timeframe that we have rejection on the trendline and our RSI is over 50 which means that we are in an overbought position. Therefore I am willing to short this pair. Disclaimer! This post does not provide financial advice. It is for educational purposes only! You can use the information from the post to make your own trading plan for the market. But you must do your own research and use it as the priority. Trading is risky, and it is not suitable for everyone. Only you can be responsible for your trading.
Short
by Mete_forex
$VET formed very strong trendline and dbAlready reached 97 stat. And bounced from trendline that we easily know in the channel previously ( t.me ). $VET has marketmaker a bit low capitalized that $MATIC & $RVN. I'm confident that next week we can check the rise of this token. - Very nice looking Stoch. and RSI. - Formed strong bullish trendline. - Double bottom formed very nice there (It can bring more psychological movements) - Stands on 0,5 Fibo solidly Only $BTC movements can bend $VET price in support direction, and even more downside.
Long
by alphanarrative
1