Bitcoin - Spotting Tops and Bottoms using RSI + Divergence
This is a work in progress. I am not trading off this idea (yet); I'm waiting to see whether it develops as I expect in the future to make sure I'm not seeing patterns where there are none.
Spotting highs:
Teal lines = bearish divergence. This is where the RSI chart diverges from (does the opposite of) the price chart.
Basically: price goes up, while RSI goes down.
Red dashed line on the RSI chart = "Look out for Divergence when RSI goes above this line"
Spotting lows
Green dotted line on RSI chart = Rebounds often (but not always) start from below this line. Some rebounds start from way above this line though.
Study carefully
- some highs (divergence) are much less compelling than others.
- some lows indicated on this chart are much less compelling than others.
Disclaimer: I'm doing this as a charting exercise to learn charting and practice techniques I've learned from others - I am not an experienced trader.
Spotting highs:
Teal lines = bearish divergence. This is where the RSI chart diverges from (does the opposite of) the price chart.
Basically: price goes up, while RSI goes down.
Red dashed line on the RSI chart = "Look out for Divergence when RSI goes above this line"
Spotting lows
Green dotted line on RSI chart = Rebounds often (but not always) start from below this line. Some rebounds start from way above this line though.
Study carefully
- some highs (divergence) are much less compelling than others.
- some lows indicated on this chart are much less compelling than others.
Disclaimer: I'm doing this as a charting exercise to learn charting and practice techniques I've learned from others - I am not an experienced trader.