using divergence in rsi with stochastic
lower price with higher rsi, bullish divergence. you can find it all over but how do you know when it matters?
pair up stochastic and read both at the same time. when stochastic indicates you have a low, coupled with the divergence, esp. on larger time frames or multiple time frames, its likely to play out going forward.
here are two separate examples from march and june. they behaved almost identically.
the blue lines in rsi and stochastic are a simple 5 ma. cross over of the leader line in each indicator is confirmation. the leader line in each will usually align with the bottom very closely BEFORE crossover.
(you got that @stinkbug?)
pair up stochastic and read both at the same time. when stochastic indicates you have a low, coupled with the divergence, esp. on larger time frames or multiple time frames, its likely to play out going forward.
here are two separate examples from march and june. they behaved almost identically.
the blue lines in rsi and stochastic are a simple 5 ma. cross over of the leader line in each indicator is confirmation. the leader line in each will usually align with the bottom very closely BEFORE crossover.
(you got that @stinkbug?)
Comment:
sorry i didnt label them: rsi is the upper indicator below the price chart, stochastic the bottom indicator.