Tag Archives: RSI
After reading recent articles in financial and social media, one may get the impression that prolonged overbought conditions in the stock market are a recent phenomenon, usually attributed to central bank manipulation and herd behavior. These are false impressions according to … Continue reading
The Australian S&P/ASX 200 closed last week a tenth of a point higher from its April 4, 2011 close and it is just a few points away from the intraday high of 4,796.4. This index is now in overbought territory according to classical … Continue reading
This is the second part on indicator divergences. Part I included results for the long side of a simple system based on the divergence concept. In part II the corresponding results for the short side are presented. It appears that this … Continue reading
Divergences between indicator values can signal continuation or reversal of short-term trend depending on the difference in lag. In principle, this does not differ from moving average crossovers where a fast average crosses above or below a slow average. However, the underline dynamics in the case … Continue reading
It is puzzling to me than in some websites and newsletters about stock investing one can see references to an indicator called Relative Strength Index. This is an indicator used mainly by very short-term traders, often the “hit and run” types. This indicator has little … Continue reading
I thought this is a good example because it illustrates how the RSI (Relative Strength Index) is a very short-term indicator and, in addition, reminds of the rule that “the market can stay overbought or oversold for longer than you can stay solvent”.