Welcome to the coffee shop everybody. This is your host and baristo Eric, and in today's video I am giving you a video Lesson based off of my preferences on how you should look for and use RSI Divergences.
THe Oscillator used in this video is The Heiken Ashi Algo Oscillator Get it free here and always BOOOOOOOOOOST IT!!
There are three problems that people have whether they are experts or when they are novices in spotting Divergence between the RSI and price.
First problem is they don't know where to look because the RS I can have hundreds of high values and hundreds of low values but you need to know which ones are the relevant ones to look at.
The second problem is a common question where people ask "which way will the price go?" The answer to that is basically the slope of the RSI is the new slope of your price so, if the RSI is angled up your price will angle up. If the RSI is angled down your price will angle down.
Now hold on a minute don't run off and start acting like you know how to trade divergences yet because there's still question number 3.
When will it go in that direction?
Just because you see a Divergence doesn't mean it's going to immediately happen so you need to know what to look for to let you know that it is actually going to go in that direction and when will that Trend begin. So in today's video I do a nice lengthy coverage on how to spot those answers and you can use the oscillator in the video by going to this link.
@A1000000DC, XL is Exit Long Postion XS is Exit Short Postion these are dynamic areas of either support or resistance. they are telling you that the trend is changing into the other direction. they are NOT reversal signals! they are only telling you a change in the momentum.
Now if you get a XS and a label afterwards that says EXIT SHORT then you should really get out of that short trade. Same applies for XL and EXIT LONG label afterwards.