When the S&P 500 is reaching new price highs and the RSI is not, a “negative divergence” is occurring. This signal weak market internals and that the market uptrend is in late phase and may soon end. Last 14 days were volatile and all indeces broke under support levels and under LT trendlines. The cases of 2000 and 2008 are the perfect examples of such bearish divergence.
Hi, try to learn more TA, before posting ideas, it potential danger for an independent investors.
Thank you!
Tilen_tradershub
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@Slavash, Any reply Slavash? Did I get smth wrong? Ah..no..I thoughts so :)
This_Guhy
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You always track bearish divergence from the top of the indicator and price action, and you always track bullish divergence from the bottom of the price action and indicator. See my post here please
Tilen_tradershub
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@This_Guhy, Than you don't capture the moment of the break down. The way you look at it, is maybe good for backtesting, but it makes no sense if you are trend/momentom trader.
This_Guhy
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@Tilen_tradershub, I guess if we are both making money then it doesn't really matter. I use divergence, support and resistance and Average True Range to measure volatility to try and predict big movements and my system has really started to come together. Depending on the timeframe when I draw lines at the peaks I look for things to break down when the divergence bounce is below 80, or if things have been consolidating for a while you can see the RSI rounding off over a cliffat about 50.
Tilen_tradershub
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@This_Guhy, True. There are many ways to look at charts, as longer it works for you, its good. :). Thanks for feedback - i will have a closer look at this, its always good to learn new approach and knowledge.
Thank you!