Technical Analysis for the Trading Professional, Second Edition: Strategies and Techniques for Today’s Turbulent Global Financial Markets, 2nd Edition

Chapter | 8PRICE OBJECTIVES DERIVED FROM POSITIVE AND NEGATIVE REVERSALS IN THE RSI

Of all the methods in the first edition, this method of recognizing positive and negative reversal signals in RSI was the most often incorrectly applied technique by early readers. Part of the problem is the change in market volatility. But the primary reason for the misunderstanding is not recognizing when a method is an analytic method versus a trading technique. I had written that this is one of the methods I use along with Fibonacci, Elliott and Gann analysis, but I never gave you a detailed example to show when a method changes its weighting and becomes far less favored when it becomes part of the decision tree for trading. Therefore, I now have the opportunity ...