IUX — Russell 2000 Index (INDEX:IUX) / 2014-03-23 — KLang

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RSI looks like a Bearish Divergence to me. That would suggest a downtrend is getting near. While I have personally found that RSI Divergence is correct nearly every time the timing can be difficult to read. Just take a look at how 2011 worked out with a Bearish Divergence. Nothing says that price cannot go higher from here before the breakdown. Get good price confirmation before entering a Short.

OldGoat

Sometimes, this is actually a bullish divergence, giving room for RSI to power up. That's why I really do not like just following indicators. Price patterns matter much more IMO. We've seen it happen many times when indices hit all time highs and indicators don't confirm - every bear is the world is screaming their head off - and BANG, we go even higher.

KLang

I agree price patterns are far more reliable. However, I do consider RSI and CCI as secondary indicators for confirmation.

I used to trade Elliot Waves, but find Harmonics to be better. Figuring out Carney's rule's is a bit tricky -- getting there. The EW background helps in locating the points.

OldGoat

Carney doesn't explain things very well as far as I'm concerned. I've seen far easier to read interpretations of his work elsewhere.

KLang

Where? I'm trying to set some good rules.

Agree, that Carney does not explain well. Lots of contradictions and poor editing. I understand why some people reject Harmonics, yet they do seem to work pretty well. Not enough data yet, but looks like better than 50/50.

A Bloomberg article said most professional money managers have a 50/50 win/loss ratio and make money through trade and risk management. The best consistent win ratio was 64%.

OldGoat

If you catch a harmonic at the start, you stop is tight and it's easy to manage. That's the key. I'm not sure about Carney contradictions, I just find his layout hard to read and I'm a visual thinker. I reference this site every day http://neoharmonics.com/learning/chapter-2-fibonacci-harmonics/

KLang

Thanks, that site has some useful information and much cleaner explanations than Carney.

OldGoat

I know!! :)

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