RSI Divergences

On Greenhill,

How kind you are! I don’t expect my request to be answered every time, as I know people like you are busy. And I am so luck that I can get diver and your help here on this particular subject, on this ChartView.

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Spot on... i may not agree with everything but do find both of their post helpful in both learning and thought provoking way... but you know what... at least they provide opinion and debate and i think this place would be worst off without them both.

nobody is all ways right, every trader i'm aware off does things their way, if it's making them money why change something that works for that individual...

i see lots of others lurking abt, be a much better place if more contributed and even if its just to ask a question to aid their learning that's sufficient... this site has been designed for that....

rgds WS

Hi Jackozy,

How kind you are! I don’t expect my request to be answered every time, as I know people like you are busy. And I am so luck that I can get diver and your help here on this particular subject, on this ChartView.

Yes, I know bullish and bearish divergences. Your this post will help me to know RSI indicator more.

Thanks for this link:dl.dropboxusercontent.com/u/20815047/%2B...SI%20divergences.jpg
One picture = 1000 words.

I regard this Negative RSI is a false sign for sp further up, and Positive RSI has probability in keeping sp from falling or reversing the sp short term downtrend. As you said that +ve and -ve divs are continuation patterns.


I did put RSI of GKP oversold chart on GKP BB on Sunday. Rcmacf responded me a post, telling me to use RSI with caution, and suggested me to read the book of John Hayden. He provided me search words: The Complete RSI, John Hayden

I found this pdf file and downloaded it. I tell myself I have to read it (it is hard for me now)

on greenhill

Hi Jackozy,

I'm very well aware of the requirements set out by Elliott Wave International and do not disagree with them. The 1.618 minimum is an additional requirement not mentioned, to my knowledge by them, but used extensively by many EWT practitioners across the globe. Please don't run away with the idea this is something I dreamt up; I only wish I could lay claim but that would be crass. I have yet to find a single instance wherein the 1.618 does not hold up, which is why I, and many others, used it as a 'must have'. If you find one then please advise as I'd love to take a look.

OG, here's a link to that pdf: mediafire.com/?ed0fb7b7t3e6y6l

GL

Hi On Greenhill, sorry for the delay in coming back to you.

You're probably already familiar with bullish and bearish divergences, yes? If not then either visit remo's learning section or just say and I'll clarify those on this thread.

Positive and Negative divergences are very different. I was made aware of these only in the last year or so by a technical poster on the GKP BB called Rcmacf if I recall correctly. I can't remember where he got them from They don't appear too often but can be used to confirm trend continuation and are therefore very important.

A positive RSI divergence can occur during an uptrend where prices drop to form a higher low (obviously during a correction/consolidation in the uptrend such as at a wave 4 or a subwave 2 or 4 of 3) but the RSI drops further and makes a lower low when compared to its level at the previous price low.

A negative RSI divergence is the reverse; prices make a lower high during a downtrend but RSI makes a higher high.

Sounds confusing in words so here's a simple picture in a link: dl.dropboxusercontent.com/u/20815047/%2B...SI%20divergences.jpg

If you search online you wil find that these are very often confused with bullish and bearish divergences but they are very different and are used for very different things. Bull and bear divs are trend change patterns whereas +ve and -ve divs are continuation patterns.

They're also known as Momentum Discrepency Reversal Points.

Try looking for a pdf of "The Complete RSI" by John Hayden. (If you find one please post it - I'm looking for that myself!).

Hope that helps!

Hi Diver,

All that really matters is that we each have methods which works for us so as long as yours works for you then that's ok and all's good. I spent a LOT of time a couple of years ago back-testing the idea that a wave 5 top could be confirmed using RSI divergences and the conclusion was that it cannot as they don't always occur. I did this work with another who I consider to be way more advanced than me when it comes to EWT (I learnt a huge amount from this person) and we agreed with our findings.

You wrote: "I disagree with regard to the minimum requirement for a wave 3: if it doesn't make at least 1.618 of wave 1 it is an ABC and not a wave 3. Anyone who claims otherwise is trying to make their labels fit their count.
So, let's agree to differ for the time being but, I'm confident you will come to appreciate the validity of these statements in due course"

I'm happy to agree to differ here but I think our disagreement on this will be for a bit longer than "the time being"

It is quite clear in the Comprehensive Course on the Elliott Wave Principle (and other texts on EWT) that it is NOT a requirement for wave 3 to be a minimum of 1.618 of wave 1. The only rule regarding wave 3 length is that it must not be the shortest of waves 1, 3 or 5. Wave 3 can even be shorter than wave 1 (as WS has pointed out) as long as wave 5 is shorter still, though this is rare.

Hope that helps but, as I said, all that really counts is whether our own methods work.