Discussion in 'Technical Analysis' started by S2007S, Oct 13, 2006.
if this doesnt scream sell i dont know what to say!
The 14 day RSI on the Dow is 76. The 10 day is 79.
The 5 day is at 85, the 20 day is at 72,
the 40 day is at 64, the 5 week is at 82, the 12 week is at 69, the 22 week is at 63, the 6 month is at 85, the 17 month is at 68...
What's a trader to do?
So many indications and so little time.
easy: dump rsi
RSI 90+ on DIA
10 more to go...
wow, an osc sitting on an overbought level on a pricewise higher high...what a damn screaming sell
just don't bet the farm on it.............
The most consistent outcome of expecting price being near the top is when an oscillator starts heading the other way, referring to daily TF and above. As oscillators would mostly lock at times of strong trend on intraday basis, I suppose the same is to be expected on longer TFs. 90-100 does not mean much IMHO at the moment, perhaps just signal a pullback, it would only provide a partial signal to me, I would need to see other indications of a weakening market. I agree with some posters on ET that it is naive to expect a reversal at the moment, though nothing wrong with trading pullbacks and buying lows or just staying long conservatively.
The indices have been pushing through these higher RSI levels and I was curious what those meant going forward.
In a simple backtest, I found that the mid sixties to mid seventies RSI reading on the Dow or SP500 - using daily bars with a 20 period setting and selling in 22 days had outstanding results.
I posted the results recently up to my blog.
Thought this might interest those that had been discussing RSI being overbought.
Weekly ES RSI was around 68 (roughly where it is now) on the week ended 6/20/03. From there the ES tacked on 150 points in the next 6 to 8 months. RSI is a great tool and I use it extensively, but just because it gets up there, it doesn't mean reversal is imminent. --How singularly useless.-- By the way Skippy, RSI is not a tool to be abandoned.
I was being glib. No disrespect intended, either to Mr. Wilder, or to those thousands of accomplished traders who find so much utility in RSI and its ilk. Personally, I find price-based "lower-pane" indicators -- i.e., other than support/resistance, moving averages, etc. -- to be of limited use. A kind of sophistry, to be perfectly honest. Then again, I don't have much of a clue about much of anything.
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