You CAN Time The Market (RSI Divergence Indicator)
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- เผยแพร่เมื่อ 3 พ.ย. 2022
- It's common for most to say that traders can't time the stock market, whilst this is true to a certain degree, you can hugely improve the probability of finding a market top or finding the market bottom.
In this video we look at the Relative Strength Indicator (RSI) whilst applying the RSI divergence against stock prices to confirm exit or entry points for the S&P 500 index.
If you applied your personal trading or investing strategy in alignment with the divergence technique, you can greatly improve your chances of success.
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Good Call ;)
Been binge watching your videos for a few days now and I very much like your style of teaching.
Glad you like them!
Gareth is soon going to get the silver button. Let us cheer for him for giving massive value !! All the best !!
Thanks! :-)
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Always great analysis, thanks for sharing such a great knowledge video.
Thanks Amit
Excellent video as always!
Thanks quantum 😉
Impressing, definitely something to think about. Clarity of contents in videos of this chanel is in contrast to stock prices: always on the top.
Thanks! 🙏
Awesome analysis. Thank you 😊.
Glad you liked it!
Another great video! Thanks for sharing.
Thanks Ray
Great video. I recreated the idea in Python and found that while these signals are found at key moments that he mentioned, they occur throughout normal ups and downs of markets and therefore run the risk of creating "False alarms." So if you see a divergence signal, it might not necessarily be a key moment, but all the key moments have divergence signals
Unless the index is down 20%+ already, which you could also apply to the concept
Yeah it's so easy to seem smart when looking backwards. From your(eric) comment this sound like it's maybe applicable with Cash Covered Puts (covered option). For stock you want to own more of. I guess you might be able to leverage it for Covered Calls, but I'm new to options and I play more like the house. I buy div only stocks (98%) and dollar cost averaging. So 2022 was a great year for me. I just kept buying every time a solid div yielding company took another market driven hit with no business driver what so ever. Looking to options to get paid even more for others speculation I don't agree with. Options are very very new for me.
@@cookreviews I am in the same boat as you but over the last little while, learning Cash Secured Puts and Rolling Out for net credit has helped me tide over slight downturns and sideways movement of some Blue chip dividend stocks. Good Luck.
This dude is a shot caller. I’ve have seen all his book reviews they are the best around.
@@FinancialWisdomwhat about catching at the peak.. How much % rise from the bottom u consider?
Learned something today. Thank you!
Very welcome!
You did it! You timed the bottom! Incredible! The only one to call it here, you are the master of the markets. All Hail.
😁
RSI ONE OF THE GREATEST Indicators J. Welles Wilder ever created so many uses
Thanks Bill
Excellent video. Thank you for your byte sized education. We love it. Blessings & Warm Regards
So nice of you
"Secret" of RSI is in the word Relative. No absolute strength in currency pairs for example, currency pair tends to go up and down,
it changes all the time.
Key is level 50, combined with divergence and trend of RSI, it is powerful method for trading. Below 50 is weakness, above 50 is strength
Awesome analysis..👏 i have been studying rsi divergence for some time now.. Have few queries.. Will get back with the same soon..
Thank you for sharing your experience. One reason why the Nov 2008 (1st) divergence might failed was the missing volume. Every other successful divergence you demonstrated had an above avg up volume bar that was larger than the previous week down volume bar. What makes 2022 tricky is the increasing down volume bar following the divergence week’s above avg up volume bar. Risk management is key.
Thanks Tamas
My p0rtfolio is plummeting significantly, I’ve lost about $320k within a few months and I'm not confident about picking st0cks anymore. Are there really no other options for me to gain from the stock market?
Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Thank you
Another amazing video
Thanks
Outstanding
Thanks
Where can you look up the RSI reliably and compare it to the broader market trend like you have done here?
Thanks
He Hi, Great Video To identify the RSI divergence. weekly chart is best time frame. In video you use weekly timeframe. Thanks
J Bravo has been teaching about this on his channel for years.
Thank you for the interesting video on RSI divergence. Would using divergence based on the MACD histogram be comparable? Dr Alexander Elder used that type of divergence in his book ' Trading for a Living'. Are most indicator divergence similar?
Hi Suboo - There are similarities, they both measure momentum and can be compared against price action.
nice stuff
Thanks!
Liking your videos and subbed! In this recession I believe we aren't anywhere near the bottom yet, the bottom will be below the covid low in SPY.
What you found is temporary divergence, a dead cat bounce along the way to the bottom in mid to late 2024. Lets see how well my post ages ;)
Hi Dan possibly.... although we did see a second bullish monthly candle close last month which always comes after a low
Looks like it did not age well
Thanks for the great sharing and teaching! Could we add an one more simple indicator, say for example, 10/20W moving average, to reduce false alarm. For example, need the price to cross up the 20W MA, thanks
Possibly, a visual backtest would likely give some clues
Vibes switch when certain homies gone, huh yungn? RIP Chii
Until VIX closes above 40 I'm not looking for the bottom. I said November 2021 a dead decade was most likely coming. I shouted March, May and recently be prepared we are going down. I'm 100% cash and day trading a little. I'm going back in 100% when I see my back tested signal since 1929 pops up.
I always have a query about profit booking.. like if currently hoding stock as per strategy taken and it's up and having 8% profit.. now confusion if it goes down I may loose current profit. Because current candle is spiked high. Possiblty it may reverse. Not sure. There is a SL placed. So how to avoid emotions here whether I should exit with 8%profit or wait for macd, rsi etc confirmation but I may loose current profit. Please advice
sir what is the best time frame in this strategy
outstanding
Thank you
would the CCI or STOCHASTICS given the same readings as the RSI?????? thanks
How long does RSI need to diverge before you take it as a serious indicator? From 30th Jan 2024 to 7th March, each RSI peak has been getting lower while the S&P500 has been going higher. That's only about 1 month though, how long does the trend need to continue before it's likely the market top?
Yes you did call the bottom so far 6 months after (which is now)!
We did 😉
You are best finance teacher for me great bro
We are already in the big crash, Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated. If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
People believe their currency has the worth it does because they have no other option. Even in a hyper-inflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
@@mohammeddumadi8323 You are right! I diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above 1.3m in net profit across high dividend yield stocks, ETF and bonds during this red season.
@@Brendavonrohr4 How can I reach out to this coach? because I'm seeking for a more effective investment approach How good is this person at portfolio diversification, particularly with regard to digital assets?
@@Brendavonrohr4 Please I'm very much interested. How can I get touch with this coach, i really want to give her a try.
Which time frame can we use for RSI divergence?
Unfortunately you don't have access to the "NDR Global Recession Probability Model vs. MSCI ACWI" Indicator except you work in a hedge fund and ready to pay big subscription cost
05:21
There's divergence in COVID 19 bottom too. Notice the last two candles near bottom. "Red followed by green" has lower low but look at RSI. RSI failed to make new low
I see now....
I see lower lows right now - is that signal for coming market correction (Final Weeks of Dec 2023) ?
I'm more concerned with the rally up to the current resistance in the S&P
I've never been able to make use of divergence. It always seems like it kinda works, but not within any predictable time frame. So while the markets may begin to correct to follow the RSI, it may take months. To me this is no different than just having a hunch that the market will reverse, which will eventually be proven right, given enough time. And their frequency isn't practical for trading. As your charts show, you may only get one instance per year, if that. And in the case of strong long-term trends, the RSI is forced to stay horizontal (or else fly off the indicator if it continued to follow the price movement), technically signally a divergence the entire time the market is in the trend. I don't know. People can use whatever they want. It's just not for me.
Can this be used on Forex? Does MACD work the same in Forex?
What time frame to use..
I use weekly
Thank u(dhanyavad)
I am from 🇮🇳
I really enjoy ur content.
just gotta figure out when the entry and exit is.
are you using wicks, bodies, or whatever matches your bias?
I do look at wicks for my entries
Hey man I love your videos, can you explain why are you choosing a different lower point in the mark 3:26? I mean, is not picked like the previous two lower points
21.2k< bottom i could see that, but not with the macro situation though. I don't even think talkin' about the bottom is worth it atm. Macro is the worst in decades energy, inflation, rate hikes, supply shortages etc etc its the perfect storm. From 2008ish till around 2021 when the economy was boomin & the fed was printing money btc still crash about 85%. So i find it hard to accept a 75% crash for a bear market that lines up with a global recession, dont make sense to me. Institutions & whales need retail to sell so theres enough supply to meet their demand & they aint buyin yet!! The thing is retail aint got any money to ape in to btc atm & over the next 12 months or so i see less money in the system as the fed tightens & everything goes up in price. So where will the money come from in that kind of a setting?? I really don't think we've seen the bottom yet or the kind of pain coming next year after mid terms. I guess we will see, I will keep buy and just trade long term more than ever, I have made over 5.6` btc from trading with Liam Bradley in few weeks this is one of the best medium to backup your assets incase it goes bearish < You can reach Bradley on ͲeIєɠɾαm @Liamtrade1,
Thanks for the update
No doubt mate, I am also benefiting greatly with his daily signals and a full time trader now. its been amazing and profitable
I thought of day trading, I really hope Bradley will guide me on making profits daily as well
his strategy has been of great support to me I admire his work ethic .
Thanks. The RSI Divergence is probably one of the harder bits of TA to master, but also one of the most rewarding. Very clearly presented. Thank you.
Thanks as always william
Good to see you hear William
Fantasic content!
Thanks NF
As of March, 2023 October is the current low of the SP500
I'd love to know who that guy is the 'so called guru'. I think if seen you reference him a few times.
😆 I hit like before the video even starts
Thanks
I trade the same way forex with regular divergence but make entry only after rsi cross 50 level
Great, which timeframe are you using for Forex?
6:35 it was the bottom of the market
Hi. Love the video. But it wasn’t at all clear what your Recession Probability Model is, where to get it or how to get it. Thanks!
Joining payment paid. but no subscription showing
Hi Vidya - Message me at www.financialwisdomtv.com 🖕
How can I recover my lost after taking 3 loss in a row? Hope you know it's going to take a lot of strength to get back to break even even with a minimal risk management??
Please do a video on this!! 🙏🙏
It should not be hard if your position size was sensible, i.e less than 2% risk on equity when taking into account the stop loss
But what time frame?
Weekly
You know, everybody is looking for and waiting for a "bottom", but I think the bottom might last for a while. Like, a year or more.
Could be right bill...
Bottoms and tops are best found using multiples of the ADR. The RSI is worthless even as a confluence indicator because it doesn't use volume.
Appreciate you adventuring in some educated speculation... Thanks!
My pleasure!
andrei jikh in the house..haha
Thats him...
Thanks FW for the video!
Thanks as always Cagri - Still keeping your promise 😉
@@FinancialWisdom Hi FW, your contribution to trading world priceless. Thanks for video again
Time frame?
Weekly
Love your content Man!! 👏🏼🔥 Just a warning for me, for this year there is divergence but without reaching oversold territory, take a look into 2008 and same happened before the final bottom. I also use a lot RSI divergence, but I get more confidence once it happens on the oversold side. Thanks and keep it up!!
Thanks for the info!
even my grandma knows this. tell me the exact buy or sell time after seeing the divergence
These divergences are not so apparent when you try to nail them at the very right part of a chart. You'd spent 2-3 weeks waiting for "confirmation" and at that time you'd miss out on a chunk of profits.
Risk management? Load puts leaps and get paid
RSI
First
well done
The depth of understanding in this content is exceptional. A book with akin insights reshaped my worldview. "Mastering Money Mindfulness" by Benjamin Hawk
he did find the bottom in 22 :-)
I did :-)
wonder if it works as well on the downside and any market or just on indices @@FinancialWisdom
In June of 2008 there was a big RSI divergence, right before the big crash. Looks very similiar to today.
6:25 it is why I exited in January. Also fundamentals said 200% x GDP = 1929 style bubble.
I am not sure we hit the bottom in 2022. Fundamentally stocks are still overvalued heavily.
Haven't seen capitulation volume like in 2002 or 2008. Just controlled selling all year.
Also every 1% interest rates go up the market typically declines 3% and the reverse is true. For every 1% rates go down the market appreciates 3%.
Rates will continue to rise and easing is unlikely to happen until 2025. A rate hike pause is possible late 2024.
The day after the election is usually the greenest days ever, but thay is in 2024.
I do have the market in a choppy phase currently. Meltdown next year perhaps.
Thanks for that james
@@FinancialWisdom I do see a potential mid term rally into mid December. Seasonality wise there is usually a mid december dip followed by the "Santa Rally"
There is a theory suggesting that the market is crashing up from hyperinflation and 2022 is just a pullback for the next leg up.
If the market starts going vertical - because the government starts doing bails outs on say Carvana instead of let them go bankrupt and auction off used cars at steep discount. Zillow can go to zero as well and we would see a surge of new homes - congress steps in and does a bailout - I would give up on the USD personally.
The Federal Reserve raising rates should force the government to cut spending because the cost of money is too high thus reducing aggregate demand to get inflation under control.
If congress fights the FED by doing bailouts - the market crashes up.
This is the fear from the bear perspective.
SUPER annoying how you don't show your TICKER SYMBOL on these charts. Are you using SPY, SPX, ES1! (FUTURES), ? There are so many things that basically chart they sp500 . I do not get the same result as you @7:00 . Again your generic chart graph just says MA 50, is that EMA , SMA, etc. etc. There are tons of moving avg. calculations. I just don't see the monthly spy chart sticking to the 50 sma as you depict.
I use IG Index to track the S&P500 cash - 50 month SMA
I completely backtested your RSI divergence and unfortunately, there are WAY too many false signals.
What are you backtesting it on spx ?
id like to find the market bottom with this method.. market making an all time new low within a 5 year timeframe, with the new low's MacD being > previous ATlow's MacD, signals that selling pressure is lowering despite making a new ATL. It's what got me my KWEB at $17 last week.
Has worked well for me to time the bottom. 9% SL for a potential double up. U only need to win 1/11 times to make money.
Very interesting video. You’re truly one of the best on TH-cam! While everybody is all gloom and doom I was wondering if the bottom was near or not. When everyone is convinced it can’t go up it does and when the herd thinks it’s now a permanent bull run it crashes… Makes sense actually
Absolutely almost always counter intuitive....
Whenever you say "due" is sounds like you're saying "jew"
"you can time the time"…it literally means you know what will happen next...literally means you have crystal ball...you really think you do?
No absolutely not, we can only move the probability into our favour.
Charts were daily or weekly?
Weekly
Basically he's saying Warren Buffett is an idiot, which is true
Lol - Not quite
@@FinancialWisdom Warren Buffett just says to buy anytime & any moment don't time anything or use technical analysis he says it in many videos, & why only a tiny percentage make any significant money in the market if it's so good, why isn't everyone well off because of the market? Where's the studies?
thanks to this video, i could unterstand the Divergence :)
5:35 You are mistaken. The lower high on the RSI chart you mentioned appeared only after candle marked as #1 closed. In other words, you would have missed the top.
You are cherry picking points on that indicator.
No one knows anyone who picks top.or bottoms perfectly no one even knows anyone who knows anyone that has perfectly picked tops and bottoms to try to do so is foolish.
True,but you can improve probability of getting close to it
But they do. Otherwise there would be no tops or bottoms
This might be the best time to buy stocks.
If you find value part is always nice to hear..Most people just ask viewers to hit the like button..
😊
I time the market all the time. Because I like money
You only point out the data to back up your theory but never talked about the fail instances. Ex. QQQ etf presented a positive divergence on the week 05/20/2022 and 06/17/22, effectively the market then rally up, but them we had another lower low. And you talk about finding bottoms. Your simply wrong my bro. If you put this strategy for trading is right but your point is finding a bottom, which is completely wrong. Good luck on your recent investment in the indexes. But I’m confident we have not reached the bottom of this bear market.
Thanks bloated. Sure my videos try to be thought provoking for further research. I do believe however it improves probability of getting closer to a bottom. IMHO
So who was right? The market bottomed out in Sept 2022 right?
@@imfunatparties9463 the market bottom in October 2022, he did a tremendous job picking the low 👏🏼.
@@imfunatparties9463 doesn’t really matters who was right. That’s not what investment is about
The RSI divergence is an advanced reversal signal...that need to be confirmed by price action.
That's why hidden divergences exist...
The problem with timing the market, is that there are 2 difficult decisions to make. When to sell and when to re-enter.
Hence, the video 🤦♂️
That was indeed the bottom of the market SPX +40% from that point rn
It sure was 😉
rsi works, i use it and i stick to it. it takes time but once u figure what do u think of that oversold area.
Rsi the one of the BS you tube gurus love.
BULL MARKET IS A GO!!! TIME TO DUMP ALL LIFE SAVINGS WITH FULL LEVERAGE BACK INTO TQQQ BABY!!! All according to Financial Wisdow TH-cam channel!!!
Nooooòoo 🙄
@@FinancialWisdom boooo!!!
😉
We will see. Serious bottom is coming.
is that your 'pennys' worth? 😀👍
Thank you
You're welcome
First