This is highly speculative, but as in my previous chart, i'm trying to use the timing of the 4h RSI pattern occurring since early this year to predict the start of the next leg down.
Summary:
1)This assumes we wont break the upper resistance zone of the descending wedge/triangle we've been in since January, and that the downward trend will stay intact for at least one more leg down to 6k or so.
2)The second assumption is that a bearish RSI divergence following the pattern we've been in (RSI reading above 75 followed by a lower high) will signal a leg down.
3)The lower RSI high will correspond closely to the peak in price, and following the pattern we've been in this will be the local top and an ideal sell point.
4)Since it's hard to know if a lower high is formed as it happens, I think selling once the RSI has dropped sufficiently close to 70 or below after forming the lower RSI high is a safe target. One might miss the price peak doing this, but assuming a leg down forms after, this would be a fine entry for a sell or short.
5)If a new RSI high is formed soon as predicted, the time frame for a lower high (and price peak closely corresponding to it) should be between 3-8 days based on the timing of the RSI pattern we've been following all year. The timing of an RSI lower high (and corresponding price peak) following an RSI high has been getting shorter and shorter, and should currently fall at a little under a week. This is all complete speculative testing of a theory of RSI timings based on a pattern that is clearly near it's end game.
I wouldn't trade on this, i'm just observing it to learn how the 4h RSI might be used as a predictive indicator.
Summary:
1)This assumes we wont break the upper resistance zone of the descending wedge/triangle we've been in since January, and that the downward trend will stay intact for at least one more leg down to 6k or so.
2)The second assumption is that a bearish RSI divergence following the pattern we've been in (RSI reading above 75 followed by a lower high) will signal a leg down.
3)The lower RSI high will correspond closely to the peak in price, and following the pattern we've been in this will be the local top and an ideal sell point.
4)Since it's hard to know if a lower high is formed as it happens, I think selling once the RSI has dropped sufficiently close to 70 or below after forming the lower RSI high is a safe target. One might miss the price peak doing this, but assuming a leg down forms after, this would be a fine entry for a sell or short.
5)If a new RSI high is formed soon as predicted, the time frame for a lower high (and price peak closely corresponding to it) should be between 3-8 days based on the timing of the RSI pattern we've been following all year. The timing of an RSI lower high (and corresponding price peak) following an RSI high has been getting shorter and shorter, and should currently fall at a little under a week. This is all complete speculative testing of a theory of RSI timings based on a pattern that is clearly near it's end game.
I wouldn't trade on this, i'm just observing it to learn how the 4h RSI might be used as a predictive indicator.
Comment:
Worked out perfectly. Bearish divergence followed by reversal.