Perfect Shorting Set Ups

No probs GC - just checked this chart and it has moved up 110 pips approx and that -div negated.

i hope the comments helped stopping you shorting this

rgds WS.

I have taken in everything thats been said, and letting it soak in.

I agree with regards to the known resistance too.

Pretty much have nothing to discuss back with - so just taking it all on board. Thanks guys.

Jackozy/WaveSurfer,

Thanks indeed for the detailed response and feedback.

I am going to make sure I spend some time too divulge what you are saying and then respond.

Cheers,

I've just got one thing to add to what WS has said. As you know, I've been using something along theses lines for a while and what I'd like to see at the third touch on the RSI downtrend is a new higher high to form a further divergence.

On your chart, GC, you've got the RSI at resistance but prices have barely made a new high and this suggests to me that prices could make new highs and the RSI could break out. Couple that with the bullish last candle.

What I'd wait for here is to see what happens with the RSI. It hasn't reversed off that trendline yet. Also, look to the hourly or 4H charts for confirming signals.

In addition, price is important so the question is: has this pattern formed at an important known resistance?

Hi GC25,

agree with you on that divergence, however that 1242 area's been tested 3 times now according to your chart & the price has just nipped abv that level, technically it's making HH & HL's, another point it also formed a inv H&S from Nov12- and broke out of it last week so you may get a pullback to re-test that breakout point and guess where it comes in approx that 1105 level...seems an important level and here's why...

That divergence will only confirm at the price point of when that divergence begin = ~1105 area, imo for the divergence to kick in it needs to confirm by the breaking down below that price level...you may get a pullback but the real selling will come when that level is broken down and then your divergence has confirmed by breaking down below rsi - 50ish.....

If you look at the price where it first started to diverge it was approx 1105 and the recent retest of that area (feb-mid march)the rise rsi came in at around 50ish, that needs to be taken out along with the price...

so yes it possible that it could be a perfect setup, but not imo yet until your divergence has confirmed by breaking the price and closing below the price it started to diverge from....

until then your short would be at risk and from your chart, looks like it could break out of that range along with the rsi can breakout also if we consider para 1 abv....

hope that makes sense ?

i could be wrong but just thought i'd share my thoughts and by looking at your chart this is what stands out to me...

WS

Below is a set up I feel is one of the more succesful short set ups.

The price action has went from one high to a higher-high, however the RSI forms a down trendline, and on the 3rd touch of the RSI downtrend trendline, the price action forms a double top (or close to)




Its the 3rd touch of the trendline that I feel provides the highest success rate for any trades.

not sure if there are any others that feel the same?