Cyber Monday saleUp to 70% OFF

Rsi_divergence

WAVE STUDY AND INDICATOR CONFIRMATIONCRISIL seems to have completed the correction at least for a shorter term. Wave counting is clearly mentioned on the chart. I request you not to get confused with Wave 2 as it is lower than the initiation point of Wave 1 but visible in Candlestick Chart. As the correction of Wave 2 have been really sharp ie. It was completed in 8 Days with 609 Points of Up move, that is why the Wave 4 is Sideways ie. It was completed in 64 Days with 438 Points of up move. Wave 1 , 3 & 5 are in Fibonacci Time zone sequence. Wave 1 has taken approximately 13 days for completion, where as Wave 3 has taken 32 days and Wave 5 has taken 105 days. If the mathematics is done the ratio stands to be at 1:2:3 Approximately. Hence it is a well structured wave. Wave 5 for downside seems completed now. It comprises of 5 minor waves and the end is a Truncated Wave. Where the bottom of Wave (iii) & Wave (V) of Wave 5th are same .Explaining the reasons for the truncation will take longer, so let’s skip the theory. Few key indicators that we should focus on are ROC, RSI & Candlestick Pattern . ROC: ROC (21 Days, Close) has breached the EMA ( 21 Days, ROC) during the formation of the bottom of Wave (iii) of Wave 5th but has taken a good support over EMA ( 21 Days, ROC) during the formation of the bottom of Wave (V) of Wave 5th. This is a sign of bullishness that cannot be ignored. RSI: RSI (14 Days, Close) on 9th Nov at the bottom of Wave (iii) of Wave 5th was 28.25 and on 7th Dec at the bottom of Wave (V) of Wave 5th the RSI (14 Days, Close) was 31. Hence such pattern is called Exaggerated Divergence as the bottom of Wave (iii) & Wave (V) of Wave 5th are same but in RSI a higher low is formed. Candlestick Pattern: An upside reversal is better marked with a close above previous day high and a low above previous day low. Of course this happened on 8th Dec and last time when the same happened was on 10th Nov during initiation of Wave (iv) of Wave 5th . If we take a conservative approach the first expected target should be 3138 as per Fibonacci Retracement basis. SL should be below 2800 on closing basis. CHART & ANALYSIS ADARSH DEY
NSE:CRISIL
by AdarshDey
What Is the RSI Indicator & RSI DivergenceRSI - Relative Strength Index Indicator: The Relative Strength Index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. It is important to note that the RSI does not indicate whether a stock is a buy or a sell; rather, it provides insight into the current trend of the stock. The RSI is a versatile indicator that can be used by traders of all levels and can be adapted for any style of trading. For example, a trader may use the RSI to identify support or resistance levels, or to spot divergences that can be used to predict future price movements. The RSI can also be used to locate potential trading opportunities by looking for overbought or oversold conditions. Furthermore, the RSI can be used in combination with other indicators, such as moving averages, to gain a better understanding of the market’s overall trend. Formula of RSI: The RSI is calculated using a formula that compares the magnitude of recent gains against recent losses over a specified period. The formula for the RSI is: RSI = 100 - (100 / (1 + (Average of Upward Price Movements / Average of Downward Price Movements))) What is periods in RSI: Periods in RSI (Relative Strength Index) are the number of time periods used to calculate the RSI. The most commonly used period for RSI is 14, but other periods such as 7, 9, and 25 are also used. This number represents the number of time periods that are used to calculate the RSI, so a period of 14 would mean the RSI is being calculated using the last 14 time periods. RSI divergence: RSI divergences are a type of technical analysis used to identify potential trend reversals in the markets. They are based on the Relative Strength Index (RSI) and are used to spot potential trend reversals before they occur. A divergence occurs when the price of an asset makes a higher high, but the RSI makes a lower high. This suggests that the current rally is losing momentum and may reverse course. Similarly, a lower low in the price and a higher low in the RSI may signal an impending rally. Divergences are best used in conjunction with other technical indicators and analysis to confirm price action. It is also important to keep in mind that divergences do not always lead to reversals and may simply signal a period of consolidation before the price continues its current trend. Divergence Cheat Sheet / Types of Divergence:
Education
by AfnanTAjuddin
1