CAT nyse Long (how to use the RSI in a slightly different way)NYSE:CAT
CAT Nyse is looking to continue the push to the upside after breaking the downward Trend, I took the depth between the low and the downward trend and projected a price target. After a higher low and a Higher high which is clearly shown on the chart gives us a better probability that a continuation move is expected to the upside.
Also if we look at the RSI, the indicator has pushed into the boundaries of the oversold area suggesting a strong bullish stance as shown on the green box, before it was consistently hitting the oversold area as shown in the red box which is translated to continued weakening.
Price is currently trying to find support on the 140.50 which is considered strong support.
If buyers are able to maintain price above this support, the bulls can be expected to take price towards the 156.50 level as a target
In regards to the RSI, one way to use it besides the divergence method is that as the indicator continues to push within the oversold it means that the negative stance is expected to continue and vice-versa of course, this helps when price sometimes gives us a hard time to speculate if it indeed reversed into a positive stance from a negative one.
