Sunil,
Please Ref. Post 18877 posted by u y/day where in u hv posted chart of nifty spot pointing out bullish diversions. It shows on 23rd jan RSI well below levels on 30 around 1pm. Where on my charts it made all time low of 31.73 around 1.40pm (34 around 1.00pm). So just need to confirm that in spite of all software’s having same formulae of RSI why there is difference??(I recollect u pointing out this research long long back)
Point No:2 Since u r doctorate in RSI. I need to share ur experience in diversions (+ve or –ve) Are diversions fruitful only in oversold or overbought zones or of some use too in no mans land?
Which price field u r choosing for RSI (OHLC)
Do u change time period for RSI for various time frame?
Hope u vl not feel frustrated with these (silly) questions.
Regards/Rohit
I think you meant Post No. 18879...
is this the chart you are talking about???
RSI well below 30 was on 21-Jan and not 23-Jan
(my shoddy picture cropping reduced the length bit more)
Confirm some things:
1. RSI 30 is represented by that blue line
2. this is a 60min chart of Nifty Futures
3. FIRST BAR IS FROM 9:55 TO 10:00; SECOND BAR IS FROM 10:00 TO 11:00; AND SO ON...
This point 3 is important - if the period of bars is different, RSI result will be different.
The 5min chart you posted today is the same on my side too...
MOST FREQUENT / RELIABLE / suitable for intraday IS THIS REGULAR BULLISH DIVERGENCE...
==> price making a lower low while RSI does not.... Time to go long with the recent low as stop (give small margin)
Rest are unreliable for intraday purpose or not suitable for 1min / 5min timeframe...
ALSO, EVEN IN TEXTBOOKS IT IS MENTIONED THAT THESE DIVERGENCES ONLY SIGNAL ABOUT A TREND-REVERSAL POSSIBILITY - ULTIMATELY, IT'S THE PRICE MOVEMENT WHICH COUNTS....
Bullish divergences usually occur near 30 zone, while bearish divergence near 70 zone..
for example, nifty is at 2850 while RSI (1min) is at 30
now, nifty moves down at 2840 while RSI goes up at, let's say, 35!!!
I go long with stop when 2850 is taken out, with stop at 2838.
I use STANDARD RSI PARAMETERS FOR ALL TIME FRAMES ( 1min, 5min & 60min) i.e. RSI of 14 period's CLOSE values
Visit this website, which was given by Learn2trade ; it's very useful & in lay language
DIVERGENCE TRADING
