Overview Reversal trading strategies capitalize on identifying turning points in the market where a potential reversal from a downtrend to an uptrend, or vice versa, occurs. In this post, I will introduce a strategy based on divergence patterns spotted with a custom RSI (Relative Strength Index) indicator. This method enhances traditional RSI analysis by making divergence detection clearer and actionable. By combining it with a strong understanding of price action, traders can gain an edge in timing market reversals effectively. Key Features of This Strategy Divergence Analysis: The core of this strategy is to identify bullish or bearish divergences between the RSI and price action. Custom RSI Indicator: The custom RSI indicator simplifies divergence detection by highlighting critical levels and marking divergence points directly on the chart. Confluence with Price Action: Reversals are validated using trendlines, support/resistance zones, and candlestick patterns. Chart Example: S&P 500 Index In the attached chart: Bullish Divergence: The price made lower lows, while the RSI made higher lows (indicated by green arrows). This divergence signaled weakening bearish momentum and potential reversal. Entry Point: A clear breakout above the trendline validated the reversal. Enter long positions near this breakout level. Stop Loss: Place the stop loss just below the recent swing low. Target Profit: Aim for the next major resistance zone or use a fixed risk-reward ratio (e.g., 1:2 or 1:3). How to Spot Divergence Bullish Divergence: Price forms lower lows. RSI forms higher lows. This indicates waning bearish pressure and a potential upward reversal. Bearish Divergence: Price forms higher highs. RSI forms lower highs. This suggests weakening bullish pressure and a possible downward reversal. Why This Strategy Works Strength of RSI Divergence RSI divergence reflects the loss of momentum in the current trend. By detecting it early, traders can position themselves ahead of major reversals. Combining Confluence Factors The success rate of this strategy increases when RSI divergence aligns with other technical factors like: Horizontal support or resistance levels. Trendline breaks. Volume spikes. Practical Tips for Using This Strategy Use Multiple Timeframes: Confirm divergence signals on higher timeframes for stronger setups. Avoid Overtrading: Only act on clear and validated divergence setups to minimize false signals. Risk Management: Never risk more than 1-2% of your trading capital on a single trade. Conclusion This custom RSI-based divergence strategy is a powerful tool to identify high-probability reversal setups. When combined with proper risk management and confluence analysis, it can significantly improve trading outcomes. Start experimenting with this strategy on your demo account and refine your approach before deploying it in live markets. If you have questions or want to discuss this further, feel free to comment below!
Bearish Div, left over orders and liquidity, looks like it is more interest to go lower than higher now that's just my take from what i see. could be wrong. wait for entry for a long at these levels 3.05 looks like the safest levels i have orders from 3.16 down to 2.95 as it moves so fast at the moment.
Based on the fib reversal ADA could reach $25 first stop at the 141 fib level following the exit of the bullish triangle pattern.
This is not an advice. Purely a personal opinion. CSELK:PARQ.N0000 In the Stage Analysis method, the Advancing stage occurs when the stock breaks free from the Base and 30-week moving average. The price of CALT moved up rapidly after breaking out the Base from the 30-week moving average. After the breakout, it increased its advancement by a staggering 677%. Similarly, PARQ is in its advancing phase and is backed by strong fundamentals. It has only gained 165% gain from its breakout. While observing the volume profile, it is noticeable for even a blind man that there is a freaking interest in the stocks. Sellers are getting hammered daily, making them regret their decisions.
TANCO I give hint on Feb 2024, Now already make about 180%. This can be hold until next year. Opportunity for TANCO. This setup is my trading idea/plan, if you want to follow: trade at your own risk (TAYOR). Risk Factors: 1. Market conditions, unexpected news, or external events could impact the trade. 2. Always use risk management strategies to protect your capital.
Shown here is a single fib series in 3 different timeframes. Imagine each buyer tells another 1.618 buyers on average. Thus the Golden Growth structure of the entire universe. It is PROBABLE that we orbit this fib a few times. It is POSSIBLE that we have topped for some time. It is PLAUSIBLE for a break and retest for next leg. ==================================================
Confluence is the word of the day. This example is a difficult one especially on the lower time frames because BTC trades 24/7 whilst DXY does not, it closes with the stock market. Thus there are gaps which you are not going to visibly see on this chart. What I have marked for you though, color coded, each movement where BITCOIN moved against DXY. Thus it is anticipated when DXY goes down, BTC will move upward. The percentage depends on the market conditions and cannot be predicted. The relationship then between DXY which is the market index that measures the value of the US dollar against all other world currencies creates a domino effect through the risk markets whenever DXY hits a support or resistance region of the map. In this regard, spending time marking your chart on BTC is going to be an utter waste of time since DXY needs to be marked first and alerts set therein. Otherwise my friends you will be chasing your tail in many trades. BTC will hit a support level when DXY does not hit a strong resistance. DXY hitting a powerful resistance at the same time that BTC is hitting a support level would give some confluence. Example now is on the chart where multiple examples are presented where DXY hit a major resistance or support level and thus the following BTC movement was the opposite to the exact level. I would mark DXY first, and then mark JPYUSD, and then mark your stock market indexes. I cannot go into great detail at this time but what you will discover after a little bit of study is that markets move against each other or quite a lot with each other however it is the against movements where trades become interesting. I am not a financial advisor, be safe my friends.
Today FORECAST on SNS Opportunity for SNS. This setup is my trading idea/plan, if you want to follow: trade at your own risk (TAYOR). Risk Factors: 1. Market conditions, unexpected news, or external events could impact the trade. 2. Always use risk management strategies to protect your capital.
Gap up opening expected in nifty near the 23800 level. Currently nifty trading in between the consolidation zone of 23700-23850 level. Any major directional rally only expected after breakout of this zone. Strong downside movement expected if nifty starts trading below 23700 level. Upside movement possible if nifty starts trading and sustain above the 23850 level.
AMEX:SPY December 26, 2024 15 Minutes. I had expected 200 averages in 15 minutes to be resisted. It broke and held on to that for more than 2 hours on the 24th of December. For the rise 592.25 to 601.34 it is important to hold 597 levels for uptrend to continue. It is also 21 averages in 15 minutes. For the larger rise 580.91 to 601.34 holding 593-594 is crucial to hold. Above 603 I expect a 3 to 5 $ move which was resisted earlier before the fall. At the moment I will sell only below 588 for good 10$ move. 575-578 is a crucial number to hold on downside. In daily uptrend is intact.