Broad-rock wrote: Hi Jackozy,
Can I ask about the RSI back test you mentioned ? (this is only valid if the RSI trend is formed from a divergence).
I think you mean the divergence at the top and not the bottom.
Hi Broad-rock,
Sorry for not coming back to you on this earlier.
In this particular case (XEL), yes, I was referring to the RSI downtrend formed from the bearish divergence at the recent 139p high.
In general, I find that RSI trendlines work reasonably well but only when they form from either a bullish or a bearish divergence. Breakouts from these RSI trendlines can be false (I have some guidelines to tell me when to expect these) so it's always a good idea to sell the first resistance.
There's a bit more to this which I've not yet ironed out so I don't want to say much more, just that in the past I've noticed that there have been false price breakouts in some shares but the RSI trendlines have worked perfectly and I would not have been caught out if I'd followed RSI rather than price.
It's a bit of a work in progress.
ATB
