Re: [EquisMetaStock Group] Re: Re-Thinking The Basics

[Mr Distinque <distinque@xxxxxxxxx>]

My approach with the RSI is to view it as a oscillating leading indicator, but only on a non-trending security.  I couple it with a trending indicator (ADX) and when the trending indicator say we are in a trend, I ignore the RSI until the trending indicator starts to indicate a weakening in the trend.

 

I also have my RSI colored to indicate a minimum amount of what I call thrust.  If the RSI does not move at least the minimum about, I ignore the RSI indication.  For me this works great on a 15min chart to slow the fake moves.

I primarily look for a fast cross of the slow from above/below 80/20 lines.  Check the thrust level (color), check the momentum indicator and nearest S/R & support levels to see if there is enough room to move or if it is a bounce/rejection.

 

In the middle of a trend I also use the RSI to add/remove positions using the same logic.

D

EGO Sum Qua EGO Sum

Sempre Avanti

 

He Who Sits In A Well To Look At The Sky Can See But Little

--- On Tue, 3/2/10, pumrysh <no_reply@xxxxxxxxxxxxxxx> wrote:

From: pumrysh <no_reply@xxxxxxxxxxxxxxx>
Subject: [EquisMetaStock Group] Re: Re-Thinking The Basics
To: equismetastock@xxxxxxxxxxxxxxx
Date: Tuesday, March 2, 2010, 10:02 PM

 

Kev,

You are on the right track but the scaling on the RSI is not always constant. Walter Baeyans in his book titled RSI...Logic, Signals & Time Frame Correlation discusses this. Basically the RSI does not always move in a directly proportional manner. Page 22 of his book explains this. There is only one neutral point which is 50.

Preston

--- In equismetastock@ yahoogroups. com, "formulaprimer" <formulaprimer@ ...> wrote:
>
> The way the RSI is calculated leads to the rethinking of the indicator itself that what the original designer intended it for.
> It is a momentum indicator but actually with the way it is constructed it is a TREND Indicator like ADX... Here is why
>
> RSI = 100 - [100/(1+(U/D) )]
>
> Where:
>
> U = An average of upward price change.
> D = An average of downward price change.
>
> This means that 66.67 horizontal line and 33.33 horizontal lines are percentage indicators.. . If in a bull market 66.67 should be touched at least once and in a down bear trend 33.33 should be touched at least once. This is the reason why the default setting of 14 days is statistically relevant by the creator Wilder. Too sum it up in a bull market once the 66.67 level has been touched by the RSI it is statically a bull market until the 33.33 level is touched to signal a bear market... See if this analysis is correct?
>

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