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Rsi Breakout
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bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Sep 29 2009 at 16:18 (édité à Sep 29 2009 at 16:26 )
hi all.

i would like to start a thread on a system i was developing several years ago, but abandoned it as had no time for it - it's a manual system.

the system uses only one indicator - rsi, and depends purely on price action. the rsi is meant help spot divergence/convergence, and is only to confirm the trade.

basically, i look for channels of support and resistance, once those are spotted i chart the same channel on the rsi. going to a lower time frame and checking for divergence/convergence.

i'm sure many here will be able to tweak it to create a full trading system.

the system is called rsi breakout as this is what we look for when executing a trade.

now let's see an example forming right now on the eur/usd:
on the 4 hour chart we can clearly see a downward channel
<a href= target='_blank'><img src= /></a>

going to the 1 hour timeframe, we can clearly see divergence happening:
<a href= target='_blank'><img src= /></a>

what i now look for is a breach of the rsi in one of the timeframes - this will usually indicate a breakout of the channel before it actually happens.

will post some more examples later.

let me know what you think.
Pièces jointes:

Sleep is for the weak.
ubernova

Membre depuis Sep 03, 2009  16 messages simon (ubernova) Sep 29 2009 at 18:49
hi biz0101, we keep bumping into each other lol, nice rsi system idea, ive recently developed my own system, i designed based on very strict trading rules. my system uses the RSI with custom settings, equidistant channels and price action, also i grid position trades within a 70% range of daily hi-lo's with a max of five grid positions, so the death trade(5th) hits profit but only by 5-10 pips, strangely it is working in trending markets very well (so far).

even those who use EA's, many slam robots, but after all, these robots simply follow trading rules that someone somewhere used manually and programmed it to automated. hehe the trick with robots is you still need knowledge,discipline and patients and of course still manage the automated trades, it just means less time sat at the pc.

i think the penny drops or, in most cases never does, hence why a few make it in forex, basic set of indicators,trust them and yourself,discipline and lots of patients and persistence = trading success with time.



he who dares shall win
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Sep 29 2009 at 18:59
hi ubernova.

yes i agree with you, seems like people think there is a magical set and forget it robot, which will make them rich in no time. due to the dynamic nature of markets the program should be tweaked to keep it ahead of the market.

your system sounds as if it's uses to many filters..how many trades does it produce weekly? i bet no more than 5.
had some experience with equidistant channels, but found them to be too lagging, they just change after the trade has opened, so couldn't make good use of it.

i would program my system if it was possible, but it's just too discretionary - it would be very hard or next to impossible to try and program this.

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Sep 30 2009 at 15:22
ok, here's the setup.

<a href= target='_blank'><img src= /></a>

missed it a bit, but there's a re-entry point as the price went back to it's new support, and is now ready to go up.

sl and tp are defined, and currently are equal.
Pièces jointes:

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 06 2009 at 12:56 (édité à Oct 06 2009 at 12:57 )
been away for a few days..

last setup failed, but as we all know they can't be all winners.

here's a setup that actually played out well.

the same 4h chart, price hit the major support and bounced back.

<a href= target='_blank'><img src= /></a>

check the breakout, the rsi resistance is penetrated before the resistance on the actual chart - this is exactly what i'm looking for. Again notice the divergence in the same timeframe (which indicates a stronger signal).

with a risk:reward ratio of 1:1, this trade would have been a winner.
Pièces jointes:

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 08 2009 at 17:55 (édité à Oct 08 2009 at 17:55 )
Another good setup happening right now.. not much to explain as i've explained everything in the image

<a href= target='_blank'><img src= /></a>

it's on the eur/usd 4h timeframe.
Pièces jointes:

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 09 2009 at 09:02 (édité à Oct 09 2009 at 09:22 )
Ok, here it goes - based on the last chart yesterday, i just got into a long position. levels are seen on the chart.

<a href= target='_blank'><img src= /></a>

although there is a breakout in the rsi, the divergence is a bit weak, so i believe the price will have another high before plumbing straight down.

we'll see how it plays out.
Pièces jointes:

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 09 2009 at 09:46
correction for the image from yesterday - this is not a hidden divergence rather a regular one. sorry for the confusion.

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 12 2009 at 15:02
the trade playing out nicely as you can see:

<a href= target='_blank'><img src= /></a>

at this point the tp profit can be increased (with extra risk) as the price naturally drawn to the nearest resistance, although i prefer to leave it at that.

we'll see if the price stops at the resistance. if the price breaks the rsi resistance, the short side is immediately off. if it halts there, we will start looking for an entry for a short position.
Pièces jointes:

Sleep is for the weak.
bizWiz

Membre depuis Aug 06, 2009  397 messages bizWiz Oct 13 2009 at 11:24 (édité à Oct 13 2009 at 11:30 )
ok, price went straight through the tp.

<a href= target='_blank'><img src= /></a>

as seen in the chart, price is now at resistance - looking to see if it halts there or keeps going up.

once it starts going back down, we'll go to a lower time frame to find another rsi breakout.

since this is a major resistance break of the september 23 high, i wouldn't be surprised to see the price going higher.
Pièces jointes:

Sleep is for the weak.
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