$SPX - Chart Link - Daily example:
here's something that I've been noticing, this works on any time
frame, use a 14 length RSI, it doesn't get oversold very easy so
when it does it's time to look for a bounce. However you need
a trigger. For a trigger I use either a confirmed MACD cross
or a confirmed crossover over of the 9 EMA. By 'confirmed' I
don't mean a simple close over the 9 EMA, I need to see a close
over the 9 EMA, and then I need to see another candle which takes
out the candle high that closed over the 9 EMA. It can either
be the next candle or many candles later. On this daily chart
I show a couple examples of this. Again this is nothing new,
I have shown this concept before, I have called it the BPT
whipsaw filter method in the past.
$SPX - Chart Link - currently here's a 5
min SPX chart, you see the same thing here, RSI got oversold and
price crossed over the 9 EMA at one point about an hr ago but did
NOT confirm - so it was filtered out. The last divergent low,
when price crossed over the 9 EMA, you got that confirming candle,
which provided your short term bounce trade.
obviously I view this as a very short term bounce trade and then
I think it pulls back again - but this is a good example of a
trigger that I noticed work on basically all time frames - works
better when divergence is in place however on the MACD
muslehead- yes it
will work for sell signals, however that I've noticed is that it
works better for buy signals - why, I suppose this is because
market bottoms are different than market tops because the emotion
is different for bottoms than it is tops i.e. fear and greed are
not total mirror opposites from each other - thus market tops and
bottoms do not tend to act the same way. Technical Analysis
is basically analyzing the collective emotions of the masses -
which manifests itself in the form of trendlines, patterns,
etc.
Also, of course it will depend on what the larger trend is, if
the market is in a bear market - then the RSI getting overbought
along with the 9 EMA would work a LOT better for sell signals than
it would in a bull market or when the market is in a major
uptrend
ha, thanks
TomW1- honestly
I'm just always looking at charts and indicators, looking for angle
and new ways to use them - and I share when I find it.
Over the years I've posted tons of educational videos and
examples on this blog, the problem is that many of them get buried
or lost over time - thus I had my programmer add a field where I
can flag educational posts, which puts them into a database -
eventually my plan is to put all these into a section where folks
can review them, look at them again etc.
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14 RSI and 9 EMA buy signal education
Posted by matt on 27th of Dec 2012 at 01:23 pm
$SPX - Chart Link - Daily example: here's something that I've been noticing, this works on any time frame, use a 14 length RSI, it doesn't get oversold very easy so when it does it's time to look for a bounce. However you need a trigger. For a trigger I use either a confirmed MACD cross or a confirmed crossover over of the 9 EMA. By 'confirmed' I don't mean a simple close over the 9 EMA, I need to see a close over the 9 EMA, and then I need to see another candle which takes out the candle high that closed over the 9 EMA. It can either be the next candle or many candles later. On this daily chart I show a couple examples of this. Again this is nothing new, I have shown this concept before, I have called it the BPT whipsaw filter method in the past.
$SPX - Chart Link - currently here's a 5 min SPX chart, you see the same thing here, RSI got oversold and price crossed over the 9 EMA at one point about an hr ago but did NOT confirm - so it was filtered out. The last divergent low, when price crossed over the 9 EMA, you got that confirming candle, which provided your short term bounce trade.
obviously I view this as a very short term bounce trade and then I think it pulls back again - but this is a good example of a trigger that I noticed work on basically all time frames - works better when divergence is in place however on the MACD
Thanks Matt Can you use the
Posted by muslhead on 27th of Dec 2012 at 01:36 pm
Thanks Matt
Can you use the same for a sell signal? If so would the trigger be a cross below the 9EMA then?
muslehead- yes it will work for
Posted by matt on 27th of Dec 2012 at 02:45 pm
muslehead- yes it will work for sell signals, however that I've noticed is that it works better for buy signals - why, I suppose this is because market bottoms are different than market tops because the emotion is different for bottoms than it is tops i.e. fear and greed are not total mirror opposites from each other - thus market tops and bottoms do not tend to act the same way. Technical Analysis is basically analyzing the collective emotions of the masses - which manifests itself in the form of trendlines, patterns, etc.
Also, of course it will depend on what the larger trend is, if the market is in a bear market - then the RSI getting overbought along with the 9 EMA would work a LOT better for sell signals than it would in a bull market or when the market is in a major uptrend
You and Steve could teach a graduate level class on TA ....if there
Posted by tomW1 on 27th of Dec 2012 at 05:02 pm
was such a thing. Where did you guys learn all this stuff?
ha, thanks TomW1- honestly I'm just
Posted by matt on 27th of Dec 2012 at 08:47 pm
ha, thanks TomW1- honestly I'm just always looking at charts and indicators, looking for angle and new ways to use them - and I share when I find it.
Over the years I've posted tons of educational videos and examples on this blog, the problem is that many of them get buried or lost over time - thus I had my programmer add a field where I can flag educational posts, which puts them into a database - eventually my plan is to put all these into a section where folks can review them, look at them again etc.