RSI Divergences

"So, just because nobody has told you how to use the RSI to its fullest doesn’t mean it is not so, merely you haven’t got to thinking about it yet. I promise you, it is so, and it is a very valuable tool. Have a great week, and may all your divergences be profitable."

A tad presumptuous, diver.

In fact, I've been using RSI divergences longer than I've been using EWT. In fact, using RSI bullish and bearish divergences has been a key part of my strategy for years. I also look for positive and negative divergence too so actually, I'm fairly familiar with RSI as an indicator though I'm not claiming to know it all.

I don't disagree with much of what you wrote, however. Just that you seem to change common occurrences into "requirements".

I'm quite sure Elliott would have usind a PC but that's completely irrelevant. The FACT is that there is no REQUIREMENT in EWT for an RSI divergence as you describe. That it is a common feature is down to the market psychology as you describe, I agree but you can have a wave 5 top which does not divergence in RSI from the wave 3 one.

One other thing. It is also NOT a requirement that wave 3 be a minimum of 1.618 of wave 1. Again, that's the most common scenario, but by no means a rule. Sometimes it's wave 5 which gets extended (I can show you a very clear example of that if you wish), in which case it's not likely to have a divergence from the wave 3 top either.

Look, I agree that your observations are frequently seen. I'm just saying that they're not rules or requirements as you do. Does it not concern you that, by insisting on your RSI rules, nearly every wave you label is corrective? Statistically, 62.5% of waves should be impulsive. How can you almost never have an impulse wave?

One very important thing I forgot to mention - the divergence can be in a lesser time-frame.

Jackozy. Reference the divergences on the RSI.
Consider the following and then tell me if you still disagree.
EWT first announced by R.N.Elliott in 1938.
RSI announced 1978 by Welles Wilder.
Personal Computers become popular for trading purposes 1990’s thru 2000’s.
Why would Elliott Wave International tell you anything for free when everything they do is to make money for themselves, and all they ever say is, ‘Aren’t we clever!’? Or, ‘Stop being stupid wasting your money on lousy trades, come and give it to us instead!’
Then consider the characteristics of wave structure.
• Wave 1 is a big struggle between the old trend and the new; which is why it can never be the longest wave. It is a fight all the way through; which is why you will not see divergence here.
• Wave 2 is the old trend trying to win the battle to continue in the opposite direction: news is still bad, in general folk are not convinced of the existence of a new trend. It hasn’t proved itself yet with a 123 break, a la Remo
• Wave 3 finally breaks the old trend and the professional money gets involved. We see real strength and the wave shoots to a minimum 1.68 of wave 1. This is the point when the professionals start checking for continuation and take their first share of profits. By this time the PI’s are confident we have a new trend and are piling in, not wishing to miss the boat. From here things can go two ways we either get an extension, because ‘news’ is good and confidence is high, or we get…
• Wave 4. Here we see the real profit taking.
• Wave 5 is a last throw of the dice for the professionals, and lots of PI’s throwing their money away. The trend weakens considerably due to an absence of professional money. This wave is inherently weaker than a wave 3 hence the necessary divergence.
Now go back to 1938. Don’t you think Mr Elliott would have revelled in a PC? Are you really telling me he wouldn’t have used the RSI as a major tool in his armoury? All this from a man who diligently manually updated charts every day! The same applies to Mr Welles Wilder in 1978. At this time a computer comparable to that in today’s mobile phones filled a reasonable size room. You can but wonder what these guys would have come up with had they had the advantages we have today!
So, just because nobody has told you how to use the RSI to its fullest doesn’t mean it is not so, merely you haven’t got to thinking about it yet. I promise you, it is so, and it is a very valuable tool. Have a great week, and may all your divergences be profitable.