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Dear Listmembers
I would appreciate any comment on the following:
"Oscillator signals are often cast in the role of secondary indicators, or market
alerts: they warn of potential price developments. Price based signals like breakouts,
moving average crossovers , chart patterns function as the actual trade triggers.
This kind of discretionary integration of oscillator signals is likely to be more
useful for most traders than independent, systematic applications.
However this raises the question of the added value of the oscillator in such situations:
because the price-based trade signals would occur regardless of the activity of the
oscillator"
My personal experience on using indicators (RSI, MACD,ADX, etc)is to "consult" these,
when price is on a support or resistance level - to see any bullish or bearish features-
and act upon price action. But as previously mentioned since price action is the
main reason for entering a trade, what is the point of doing momentum analysis at
all?
Recently I was observing a stock consolidate on a support level -and have a positive
RSI divergence-
however a few days after, momentum fell, and the RSI trendline was broken, and the
stock broke support.
I shorted the stock with a 5% stop-loss just above support (now resistance)levels.
Since my trade was based on price action, observing indicator behavior, proved pointless.Even
if the stock had indeed exhibited "textbook" behaviour and broke on the upside,
I would have simply bought it , but still the RSI would have given me no "value"
since my main entry-trigger would have been price action and not the indicator pattern/value
etc.
Any comments/recommendations would be highly appreciated.
Kindest regards
Alex Spiroglou
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