Oscillate The Right Way: RevisitedFor all the basic stuff that I am using in this post, you will have to visit the following idea. This post is in continuation of SBI weekly divergence study..
Abbv. used:
Overbought -- OB
Oversold -- OS
Divergence -- Div
A-- OB
B-- Div after OB at A
C-- Double top and Div
Multi week correction back to support
D-- OS at support and very sharp rally due to news
E-- OB in the same news candle
Multiweek correction back to support
F-- OS and Div at support
Multiweek rally to previous highs
G-- OB
H-- Div
Price still rallied and made new highs
Later a very sharp fall back to support
I-- OS
J-- Div at support
Price rallied sharply to the high of point E
K-- OB
L-- Div
At L we have similar condition as we had at E. These conditions may pull the price back to the high of E at around 350 to find some support.
Some observations:
# Div not always lead to an immediate fall. Once it is OB/OS conditions, one may have to look for div trades on lower timeframes like daily.
# One should not force trades and let the price take its course of action and reveal hands (eg at H)
# Price action at lower timeframes should be given equal importance.
# Div after OB/OS conditions works great.
# Sharp rallies which take old highs in just one or two weeks plus OB conditions means caution. Same is true for sharp falls.
# Div trades look very simple in the hindsight but as per my experience they are not that easy to trade in the live market.
I hope this will add to your knowledge.
Regards
JJSingh
