RSI (Relative Strength Index) Trading Masterclass | Gaurav Khullar | Skillshare

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RSI (Relative Strength Index) Trading Masterclass

teacher avatar Gaurav Khullar, Professional Banker(10 Years Experience)

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

18 Lessons (1h 31m)
    • 1. Intro to the Class

      6:18
    • 2. RSI Basics

      4:24
    • 3. RSI Calculation

      6:13
    • 4. Inserting RSI to Charts

      2:18
    • 5. Overbought and Oversold Conditions

      4:21
    • 6. RSI Divergence

      4:02
    • 7. Divergence Psychology

      4:11
    • 8. Divergence Types

      3:13
    • 9. Divergence Strength

      3:03
    • 10. Multiple Divergence

      2:50
    • 11. Hidden Divergence

      9:01
    • 12. RSI Failure Swings

      5:39
    • 13. RSI Range Shifts

      8:01
    • 14. Improving Your Winning Probability

      2:54
    • 15. How to Screen Stocks for Trading using RSI

      4:45
    • 16. Price Action Trading Setup using RSI

      6:33
    • 17. Modified Conners Setup

      8:04
    • 18. Confirmed Divergence Trading Setup

      4:45
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About This Class

Welcome to this  RSI Trading Masterclass. This course will provide you in-depth  knowledge of RSI indicator and also helps you in designing trading strategies using this amazing indicator.
Friends RSI which stands for Relative Strength Index is one of the most used indicator by technical Analysts and traders.

Most Often Traders use RSI to identify the general trend of the market , OB/OS levels and lastly Divergences.
But friends even after mastering all these concepts many traders fails to generate profitable trades.
Now the main reason for this is following the traditional and age old approach of buying at OS level and Selling at OB levels.
All the concepts discussed in this course are explained with the help of practical examples so that you can understand the concepts in a simple and practical manner.
Lastly, even if you have absolutely no knowledge of RSI even then you can join this course since I will take you step by step towards mastering RSI.

Meet Your Teacher

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Gaurav Khullar

Professional Banker(10 Years Experience)

Teacher

Related Skills

Business Finance Trading RSI

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Transcripts

1. Intro to the Class: Hello friends, welcome to this RSA trading masterclass. Friends. This course will provide you in-depth knowledge of RSI indicator and will also help you in designing and implementing trading strategies using this amazing indicator. So RSI, which stands for relative strength index, is one of the most used indicator by technical analysts and traders. Most often traders use RSA to identify the general trend of the market over what or oversold levels. And lastly, divergences. But friends, even after mastering all these concepts, many traders fail to generate profitable rates. Now the main reason for this is following the traditional and age old approach of buying at oversold level and selling it overboard levels. Now, just see this shot of joules, USD currency pair. And notice how this currency pair entered oversold region here. Friends or traditional or textbook RSA trader will just see this as a long opportunity and immediately take his coalition. But what happens after entering? As you can see, prices going down and more down. So friends had you entered here based on this age old rule, then your stop-loss would trigger here since prices going down against your sentiments. So here is a point that is in trending markets, RSA tends to be in overboard or overs or region for a long period of time. And if you're creating strong trending market expecting a reversal the moment RSI enters over water oversold conditions, then most likely you will face losses in such trades. Next, Friends. Another reason why traders fails to make successful trades using RSI is because of using the concept of divergence blindly. The moment they see a divergence, their eyes lit up, and they enter into the trade that very moment. But to their surprise, market doesn't make any reversal which results in hitting your stop loss is. Just look at this example of Infosys Limited and notice this bearish divergence. Now what traditional artist I trader will immediately take a short position, but as you can see, market doesn't make a reversal as expected. So for instance, this is where discourse that is RSA trading masterclass. We'll provide you an edge over traditional RSA trading practices. This course, well, in fact, teach you the correct way of using RSI in your charts so that you can take high probability profitable trades. Most traders just use RSA in isolation, as you saw in previous examples. But in this course you will see many unconventional ways of using RSI, which will not only bust many of your meals, but we'll also provide you many profitable trading setups using our SI. This course will in fact change the way you see RSI forever. You will learn multiple other ways of using RSI, apart from traditional uses like identification of overboard or oversold conditions or normal divergence is not only this, you will actually learn to develop your own trading strategies using RSI friends. All the concepts in this course are explained with the help of practical examples so that you can understand the concept in simple and practical manner. Lastly, even if you have absolutely no knowledge of RSI, even then you can join this course. Since I will take you step-by-step towards mastering RSI. So let's see the curriculum of the schools in detail and see what you will learn in this specially designed course. First, you will learn some RSI basics. So dat your base becomes strong and you are ready to dive into some advanced concepts. Then we will look at RSA calculation. Friends here you will see how RSI indicator works and the basic math behind it. Then you will see how to blog RSI onto the chart practically and other settings of RSI. After this, we will learn about overboard or oversold conditions in depth and also on the psychology behind formation of these levels. After this, we will dive into the important concept of RSI divergence. Then we will also look at psychology behind formation of divergence. Next Wednesday we will look at divergence type in depth. So here you will see some unconventional divergence diets other than normal bullish and bearish types. Then you will see how to measure divergence strength. Friends, please note not all divergences have same strength. So in this lecture, you will learn how to measure the strength of divergence that you are seeing on the chart. Next, we will learn the concept of multiple divergences. After this, we will look at Hayden divergence. Next one is you will add important RSI concept of failure swings. Then you will earn another advanced concept that is redshift friends. This is very important concept that all RSI traders must know in order to succeed in the market. After this, we will see how to improve our winning probabilities using RSA. Next, we will solve another problem of many traders that is how to filter the songs for trading using RSI. Friends, most readers learn bits and bytes of Versailles, but they are often confused and make many mistakes in picking the right and quality stock for trading using RSA. So in this lecture we will look at strategy of how to filter out fused all from thousands of listed stocks. Then French towards last leg of this course, you will learn some amazing trading setups using RSI. The first setup is a powerful price auction trading strategies using RSI. Then this next strategy is also my favorite setup and give some high probability trading setups. This strategy is in fact based on corners way of using RSI. And at last we will see another trade setup using RSI called confirmed divergence setup. So friends, if you're a day trader, swing trader, or even an investor than this course is definitely for you. Join this course to add RSI injury trading arsenal. And I'm excited to meet you in the opening lecture of this course. 2. RSI Basics: Hello friends, welcome to this opening lecture. Friends RSI stands for relative strength index, which is basically an oscillator that measures the speed and change your price moment. It was developed by J-val spider, who along with that is I developed some other indicators as well. Now those of you who are new and don't know what an oscillator is, friends. An oscillator is basically a technical analysis indicator that varies over time within a range of values. Now some of the common oscillators are MACD, ROC, than RSI and CCI, et cetera. And out of these, RSI is most swimmers and is commonly used by traders. Now for some value of RSI oscillates between 0 and 100, as you can see here, with upper bound has a 100 and lower bound is 0. Rsi is in fact the largest used leading indicator in technical analysis world. Now friends are leading technical indicator is one in which a trader can anticipate the future price movements. In simple words, it tells you the future direction of price, as you will see later in this course. And friends, RSI is one such indicator that doesn't follow the price, but actually it measures the speed and momentum or fries and build on this predicts the future price moments. Now for its asset in opening lecture, RSI is one such indicator that works in almost any asset class. We'd stop forex Commodities, Futures, cryptocurrencies, etc. So all this makes RSI a must have tool in your trading toolkit. Next one is RSI is extremely popular momentum indicator and traders are using it from past many decades. Out of its many uses, the most common use is to find overworked and oversold levels. Now what we mean by overboard and oversold levels, friends in simple terms, when RSI enters overboard region and then this simply means debt securities trading above its intrinsic value or fair value, and a correction is expected in near future. So this means that security is a candidate for shorting. As you can see in this Infosys chart, just notice here when the RSI enters overboard region and observe the price heading downwards after this point, then friends or oppose it of overboard conditional is oversold condition. So when RSI enters oversold region than this simply means that security is trading at a discount or below its intrinsic value or fair value. And it is expected that the security will start moving higher in near future. So this makes the stock a long candidate. Now, as you can see in this chart, when RSI enters oversold region here. And notice after this how price made a reversal in upward direction. So when stocks are currency pairs that are in overboard or oversold condition on have a greater chance of reversal. But please note an important point that they could remain in overboard and oversold condition for a pretty long time, as you can see here in this chart. Now traditionally, according to wilder, RSI is considered overboard when it's above 70 and all sold when it's below 30. A buy signal is generated when RSI goes below 30, and a sell signal is generated when RSI goes above 70. But for illustrating simply on the basis of stock entering overweight or oversold condition is a perfect recipe for the loss. As you can see in this shot of euro-USD, where RSA enters into the oversold region here. But still the price went down and down at more down. And if you are new to RSI, then these charts must be confusing for you, isn't it? So it's very important to bust this age-old or traditional way of using RSA. And this course will help you in achieving exactly that. This course will teach you some trading strategies that will help you in identifying high probability and high-quality trades. And you will also learn how to execute such traits. So these are all the basics that you need to learn to proceed with this course. In next class, we will see how RSI is calculated. 3. RSI Calculation: Hello friends, welcome to this new lecture. In this lecture we will learn how RSA is calculated and the formula that in fact change the trading world in a very short span of time. Now for instance, formula for RSI is quite simple and it consists of two parts. That is, RSI equals a 100 minus 100 divided by one plus R, where R stands for relative strength and is calculated as average gain divided by average loss. No friends Weiler use default 14 days period for RSA calculations since he believed that lunar cycle of 28 days greatly of extra markets. Thus you took half of 28 is 14 as default RSI period, which is in fact used still today as default RSA look-back period. Next, you must be thinking what this average gain or average losses. So for its average gain is calculated as sum of gains over past 14 periods divided by 14. And similarly, average loss is calculated as some of the losses over past 14 periods divided by 14. Let's see a practical example to understand the concept better. This is the data of one of the leading banks, that is HDFC Bank. You can see the daily closing price on this column. So let's start calculating RSI for this dog with this daily data. So in step one, we took the data of this talk for the month of January. Then in step two, we will find the change in daily price. So in this next column, vf calculated the change in price. Now please note, change in price equals the current closing price minus dvz closing price. So for fourth January change will be simply 14, 16 minus 14 25, 0.05, which gives me negative of 9.05. Similarly, I have calculated chain for all the days. Then in step three, we will create two columns. One will show the gain and other column will show the loss. If the price increase from previous day, then we will place it in gain column. And if the price drops, then we will place it under loss column. So this negative of 9.05 will be placed in loss column. Friends. I hope you understood this point. This point is very important with respect to RSA calculation. Then this 10 point 700 will be placed in gains column. And similarly we will paste all these changes in their respective columns. Now next we will calculate average gain or average loss friends and RSI indicator. To smoothen the price movement, we take average of the gains and losses for a certain period. Generally, RSI is calculated for 14 periods. So for the first 14 periods, it is a symbol average of the values. So for, for January to January, average gain will be sum of all these divided by 14, which comes out to be 8.05. Similarly, average loss comes out to be 3.26. Now thanks. Next comes an important change in calculation of RSI. So please note since we are placing more emphasis on recent value, so for next set of values, we use this formula that is next to average gain equals previous average gain. Multiplied by 13 plus current gain and hold of this divided by 14. That's what 22nd January average gain will be 8.05 multiplied by 13 plus 0 divided by 14, which comes out to be 7.47. Similarly, we will calculate an average loss also using the relation previous average loss multiplied by 13 plus current laws and whole of this divided by 14. That's what 22nd January average loss will be 3.26 multiplied by 13 plus 31.25. And whole of this divided by 14, which comes out to be 5.06. Principle any please calculate next values yourself as an assignment. Then in step five we will calculate relative strength, that is RS and short. So we will add another column in this table, core RS, which is simply average gain divided by average loss. Thus for 21st January, RS will be average gain divided by average loss equals 8.05 divided by 3.06, which comes out to wheat to 0.46. Friend. Similarly, please calculate remaining value of RS yourself as an assignment. And lastly, in step 6, we will calculate the value of RSI France. Finally, we have reached the last step, and here we will find RSI using the relation which we have learned earlier. Data is RSI equals a 100 minus 100 divided by one plus RS. So just substitute the respective value of RS and find RSI for all the days. So for 21st January, RSI equals a 100 minus 100 divided by one plus 2.46, which comes out to be a 100 minus 28, 900 equals 71.44. Friends singularly, you can find all remaining values of RSI and enjoy your charts. You will see movement of RSI like this. So friends hope you are now clear with the concept of RSI calculation. All these calculations are fairly easy with Excel. This is the Excel template to calculate RSI, which I have attached with this lecture. So first before winding up this lecture are very important disclaimer, friends, the formula for RSI, which we have discussed here, is generally accepted. But you will see certain variations in the formula based on the weightage given to average gain on average loss. Please note as the number of data points increase, the RSI indicator also gets better at measuring the market sentiments. Some markets sources recommend at least 250 datapoints before to start making your trading decisions based on RSA. Does, if you check the RC values of the example which we have discussed here, you will find certain variations. And that's because of this reason only we have calculated RSI with a very small set of data points in our example. So let's hold no mathematics behind RSA is geared to you. 4. Inserting RSI to Charts: Hello friends, welcome to this lecture. Friends with basics of RSA cleared. Let's see how to insert RSI indicator in our chart. And also what changes we can do. I'm using free charting platform of trading view.com and France. Most other charting platforms are in fact similar to this only. So to insert RSA indicated in your chart, just go to the indicator list and select RSI from this list. Now when you click on RSI, the default RSI of it devolved RSI settings of 14 period. Over what level of 70 and oversold level of 30s added by default in your charter. Next, firms to alter these default settings, you can simply go to the central Format tab. And you're going to alter this period here. You can choose a period as per your trading strategy. Suppose your trading strategy needs RSI. Now please note here that when we reduce RSI period, it becomes more sensitive. Friends just see this chart of HDFC bank would default RSI of 14 period. Now when you degrees RSI to PDF to notice how sensitive RSI becomes a two-day RSI is more likely to become overweight or oversold and a 14 day RSI, shorter period, RSI is in fact used by short-term traders since it gives more trading signals as compared to longer period RSI. Now let's come to the settings of our water and oversold levels. Friends, by default these values are 70 and 30. But to alter the values, simply again go to the Format tab, then go to style. And there you will see these two fields up or my anode lower band friends. These are nothing but your overworked and oversold levels. Now you can edit the levels as per your trading style and then simply click, okay. For instance, these settings gives me a clear view and better analysis of the charter. Sovereigns. With this, I wind up this lecture, hope you have successfully inserted RSI in your chart and also other settings as per your trading style with respect to overboard and oversold levels. 5. Overbought and Oversold Conditions: Hello friends, welcome to this lecture. Friends, we have already had a glimpse of overboard and oversold conditions in the introduction to this course. In this class, we will go in depth into these two pillars of RSI. So Renzo, fact that RSI is a revolt momentum oscillator, it is often used to identify which is something called overboard or oversold conditions. Now, over what condition happens when the financial instrument experiences or rise in price to such an extent that it has gone over a certain limit on a scale. So when this happens, it is said that over what condition has occurred and what follows by a trading rule is a reversal in direction. Hence, in this situation, or traders should look out for selling on shorting opportunities. And this is as per traditional RSA usage. Now for us, an indication of overboard and also levels of any asset class is in fact a main function or use of RSA. For most readers, this is in fact single-most use of RSI. And the only reason that they include this indicator into the charts. So as we have learned earlier that if RSI goes beyond 78 indicates that the stock is in overboard level and soon its price would come down. Now if you'll notice this daily chart of currency B or GPB, USD, you will notice that RSI value has crossed over what level of 70 at these three points. And just notice that the currency pair also took a reversal after that. Friends you can understand over what level as the level where market is set to be, where market is said to be overheated and it indicates depth correction is very near. Next time, suppose it off over waters oversold condition. And similarly, when the price is below this level of v, call this oversold condition or the condition where reversal of what direction is expected. Let us against your practical example. This is daily chart of us talk Amazon. And just notice that the stock is an oversold condition and at all these points. And if you carefully observe, you will see that the stock indeed took a reversal in four directions food after that. But France, is it really so easy to create RSA this way? Well, friends most mutators only know this way of trading with RSI for them and RSI interests, overs or region simply go long. And when RSI enters over what regions simply go short. But first, this traditional way of using RSA is not much effective and often leads to false traits. So at this stage, you must first understand that if the financial security or the stock in which you are trading goes into overboard regional than that does not necessarily means that price will definitely go down. In fact, RSI can remain in overboard or overfull region for a sufficient period of time and price will keep rising and falling. Just look at this shot of SBA. Notice this region where RSI is in Overwatch region for a significant period of time. Though traditional RSI theory states that price need to make a downward movement from here. But as you can notice that the bullish trend is so strong that the stock made a straw moment enough. What direction? Similarly, notice this euro-USD chart. Friends just look at this region where RSI enters oversold region. But as you can see, the currency pair keep moving down even after going into oversold region. Friends or market was in fact so bearish that the currency pair keep moving downward and there's RSA remaining oversaw region for a long period of time. Thus, we can conclude that reversals that overboard and oversold regions are not necessary. The probability of reversal is high inside Viz market. But in a trending market reversals are not imminent. Does using RSI as a standalone tool for buy and sell decision medicine to losses in a strong trending market. But again, friends, please don't worry, we will conquer this problem also later in this course with our trading strategies. So with this, I wind up this lecture, hope the concept of over water and oversold is clear to you. 6. RSI Divergence: Hello friends, welcome to this lecture. French divergence is one of the most powerful tools for determining hypermobility reversal rates. But this is possible only if you know how to use it correctly. And RSI is one such indicator which helps in identifying and spotting divergence clearly and precisely. So thanks, divergence is basically the disagreement between the price and the dictator. Or we can also say that divergence occurs when the price and RSI are doing two different things. That is, price is making a higher high, but the RSI is making a lower high or vice versa. So as you can see here, this is daily euro-USD chart. And as you can see, the price is making a low, low here. But on the other hand, when you look at RSI, it is making a higher law. Now this disagreement between price and RSI is nothing but divergence. Also notice this nifty chart where you can see the price is making a higher high. But RSI, on the other hand, is making a lower or higher friends here also there is disagreement between RSI in price action. So here also there is divergence. So for us with this, I hope divergence identification is clear to you. Just practice locating divergencies on a naked chart before you move ahead with the lecture. Next time divergence is classified as bullish divergence, MPH divergence. Let's foresee what is bearish divergence. Now friends or bearish divergence occurs when the security records a higher high, but on other hand, RSI forms or lower, Higher. Just notice the nifty 50. Now this is the region we have price is making a higher high. But when you look down and see the RSI, it is making a lower high. So this type of divergence is nothing but a bearish divergence. Friends asthma divergence. You read this bearish divergence pattern indicates a high probability of price reversing to the downside. And you can also notice that price indeed made a reversal after formation of this bearish divergence. Next, first oppose it of this divergence is bullish divergence. So in case of a bullish divergence, the momentum shifts of words in due course of time. That is, in case of bullish divergence, the price will make a lower low, while RSI makes a higher low. Friends just noticed this euro-USD chart. Notice this boorish divergence here. As you can see, the price here is making a low, low, but on the contrary, RSI is making a high low. And you can also notice the trend reversed after formation of this strong bullish divergence. So in short, if you see this kind of formulation in your chart, then this is nothing but a divergence. The first one is bullish divergence, and next to the right is bearish divergence. Now friends, if you are considering divergences as trade signals, then you must be very careful here, because the divergence is a very strong reversal indication, but it must be noted that divergence are misleading in a strong trending markets. A strong uptrend can show numerous bearish divergencies before a top actually occurs. So later in this course, we will eliminate this false signals using a trading strategies. 7. Divergence Psychology: Hello friends, welcome back to a new lecture. Friends. As a trader, it's very important for you to understand the mechanics behind any indicator or the reason for occurrence of any phenomena. So in this lecture, we will understand the psychology behind formation of divergences. But first, a small task for you. Just look at this for our chart of current CPR euro-USD. Now just observe the chart and then notice RSI below. So how many bullish divergences can you see? Just pause the video and absorb it yourself. Did you find any bullish divergence? Welfare it's DID is no bullish divergence here. What you will find bearish divergences like here, here. And here, denoted by 1, 2, and 3. But friends you will see later in the course that the bullish divergence most often occurs in a bear market and not in bull market. You will rarely find a bullish divergence in a strong bull market, as you can notice in this chart of euro-USD. So with this observation, we can conclude that price generally trends down before the occurrence or boorish divergence on the chart. Friends in trading, It's always said Dad go with the trend. So when the trend is down and most traders observed at prices are heading downwards, they also exit their belong creates and enter into short reads with the aim of exiting at lower levels. Now the RSI, which reflects the change in average gain or average loss for a particular time period. So that fall in prices, RSI also starts to fall and finally crosses below 30 level. Now as the price continues to fall, the trader with low risk appetite start to realize that prices have moved substantially low. And now these traders who have shorted early in the decline, they begin mining to exit their position and with prophase, and this in fact slows down the plunge of market. Now as the continuous drop in prices slows down, other traders are also quick to notice this. They also start to exit in fear. Disinfect starts to decline. And as soon as the decline stops and prices begins to rise, traders are quick to pounce on this rally and start buying again, which ended propels the price is higher and higher. So with the price, RSI also starts rising, upward from its oversold level of 30 or lower. So France, as the price is really, again, traders with lesser risk appetite begins to think that prices are too high and the begun to sell vision and pushes the prices to a new law. But what about RSI? Now for us, this is where the mathematical formula of RSI comes into picture to do it's one does. Since RSA uses a ratio of average gain to average loss over n periods of time. It will also be forced to move lower along with the price. But at a lower rate. Does we will see a new low in price. But RSI, on the other hand, will not get lower than the previous law. That is, this does, we will get a bullish divergence between price and RSI. So for instance, is a basic market psychology behind the formation of divergencies. Market is always driven by forces of bulls and bears, and divergence is no exception. Now France, with this discussion, I hope you got the answer to the quotient which we asked earlier in the lecture. That is why there was no bullish divergence in charge of euro-USD. And the simple reason was that the currency pair wasn't strong uptrend. In fact, the currency pair wasn't very bullish mode. Does ask for trading psychology, which we discussed. There is very less scope of formation of boorish divergence. 8. Divergence Types: Hello friends, welcome back to another lecture. Friends with psychology behind the formation of divergence cleared. Let's now look at types of divergence. Now there are two main categories of divergence. First is wide divergence and second is closed divergence. Let's see each one of these in detail. So first let's see what is wide divergence. Now friends in wide divergence, as the name says it, all those wings are at a fair distance from each other. Just look at the euro-USD chart and notice how the swings are at a good distance from each other. And similarly here also, this is a four or chart of Tesla. And just notice this higher high in price and lower high made in RSI. Thereby making a bearish divergence. Friends. In fact, there was back-to-back bearish divergence here as denoted by 1 and 2. Now please note both these divergence will be classified as white divergence. And if you want a thumb rule, then just count the candles between swing highs. And if number of candles are 10 or more, then you can classify it as a wide divergence. Next, let's see close divergence. Friends in a closed divergence, the swings are very close to each other, and on many occasions These are not even visible in a candlestick chart. Let's understand this with the help of some practical examples. Let's again take the example of stock Tesla. This is our leach out of Tesla. And please try to locate some bearish divergence. Well, you must be finding very difficult to locate, isn't it? Now for us, this is what makes clothes divergence for very special. So the best way to locate close divergences to switch this candlestick chart into a line chart. Now this is a line chart for you and please try again. And now can you locate a close bearish divergence? Well, here it is. Just noticed these very close Swing highs with seconds swing higher than the first one. And also note the RSI below. It is in fact making a lower swing high. So France always switch to line chart to look at close divergence. Here also, you can notice that stock move downside after formation of this closed divergence. Next, let's look at another example. This is a chart of reliance industries. Now just see this lower, low in price and higher WHO in tonight ISI. This is also a close bullish divergence since swings are very close to each other. Here also we saw small upswing after formation of this divergence. So I hope the concept of wide and close divergence is clear to you. Please note that locating divergence is extremely important for a successful parasite reading. In fact, the primary use of RSI is identification of divergencies only. 9. Divergence Strength: Hello friends, welcome to this lecture. Friends. In this lecture we will see the strength of divergence based on how and where they are formed. So for trading purposes, most often you will see the formation of divergence at any of these four locations. Now there are four cases. So case one is white swings plus RSI at or insight over water oversold levels. So France, as you can see in this chart of euro-USD, you can see swing loads in both price and RSI are wide and also note RSI is inside oversold region making a higher law. The next is wide swings less RSI close to overboard or oversold levels. Now France here also in euro-USD chart, you can see wide swings, but RSI is making a divergence very close to 30 level that is oversold level. Now this type of divergence comes under this second category. Then third is close wings plus RSA add or insight over water oversold levels. Now for us, as we have discussed earlier, that close wings are not visible whack candlestick chart. So it's better to switch the chart to a line chart. Now please note here and notice this close wing and Prize and RSI is also making a divergence inside the overboard level. Does this type of divergence comes under this third category? And lastly, we have close wings plus RSA close to overboard or oversold levels. Friends here also you can see euro-USD is making a close Swing and RSI is making a divergence very close to overboard level. Friends here please note we will consider RSA close to over water oversold level, even if RSI swing is inside over water oversold levels and others wing is outside these levels. Now you must be knowing and trading. There's never a perfect trade or pattern. You may see divergence which are different from above four cases. But on an average, the divergence that is Deir on your chart will be from any of these four cases. We don't count divergence happening just our own middle of 30, 70 zones. For reversal trading purposes, we only consider divergence that is either close to overboard or oversold levels or inside the overboard or oversold levels. Now with respect to strength, it is observed that strength of case 1 is greater than K2, which is greater than K is three, and this is greater than case for girlfriends. Each of these divergences are strong signal of reversal. But you can use this chart as Tom rule to measure the strength and quality of divergence debt is appearing on the chart. This thumb rule will in fact help you in making better trading decisions. 10. Multiple Divergence: Hello friends. Welcome to this new lecture. Friends with increasing number of candles between the RSI swings, the probability of occurrence of multiple divergence also increases. Now multiple bearish divergence occurs when there are successive higher price highs, while the RSI has successive lower highs. Similarly, multiple bullish divergence occurs when there is successive lower lows in price, while the RSI has successive higher swing low. Now friend said, Please note that simple divergence, which we have learned a law, indicates that the previous trend may resume was the replacement is over, but the formation of multiple divergence increases the probability that the preceding trend is finally over. So please understand the difference here. Multiple diverges indicates the trend is about to change. While the simple divergence that we have learned a layer indicates that there may be a correction in near future. And after the correction, the preceding trend may continue. So please note the difference between these highlighted words. That is trend change and correction. Now just look at this shot of ICSE bank. Notice this formation of higher highs in price, but RSI is making a lower high. Then here again, there is high in price, but lower high in RSI. As you can see, these two are multiple bearish divergences as denoted by a fun and two friends here please notice how this multiple divergence brought an end to previous uptrend. And this talk after formation of these to multiple divergencies goes into bearish mode. Let us see one more example to see the power of multiple divergence. This is a 40 chart of currency per GBP USD. Just notice this bearish divergence from a to B as denoted by one. Then from B to C denoted by two friends. As you can see, the trend was operand till here. But after formation of these to multiple divergences, the previous bullish trend finally ended and currency pair enters into a downtrend. So for us, I hope the concept of multiple divergence is clear to you. This is a very powerful concept with respect to divergence. But again, in trading moment of price is not asked for any rule or fixed pattern. So in trading strategies that we will learn later in this lecture, we will eliminate false trades by eliminating false signals. 11. Hidden Divergence: Hello friends, welcome back to a new lecture. Trend is your best friend. Friends. How many times you have heard this in trading? I think a lot, isn't it? So whenever you can get a signal that the current trend will continue, then it's definitely a good news for you. Isn't it? France? We have already covered various divergence times in previous lectures. We learned that divergence is an indicator of potential reversal. But please note that divergence can also be used as a possible signal of trend continuation. Data is after formation of divergence, price continues to move as per current, ongoing trend. So here comes the concept of hidden divergences, which are similar to normal divergence, which we have learned in previous lectures. But the difference lies in the fact that normal divergence alerts you ahead of time of a possible reversal or changing the price woman. While hidden divergence alerts you ahead of time that the trend may continue. Hidden divergence is most likely to occur in middle of a trend and often indicates the end of a pullback within the existing trend. Now for instance, after a hidden divergence, the trend often continue. So these are one of the most powerful and high probability and three triggers, especially when you add some consequences to it. Most of our traders are searching for that entry level during a trend. And hidden divergence helps you in entering into a trending market after a healthy pull back I've just occurred. Next ones, these are called hidden divergence because these are not always to the untrained operator. This divergence do not occur near or inside, overboard or oversold levels of RSI lighten or whatever just hidden divergence in fact occurs between 3070 zone. And this is also one of the difference between classical divergence and Hayden divergence. Next lecture, two types of hidden divergence. So first is bullshit and divergence. Friends a bullshit and divergence occurs in an uptrend. Here the price makes a higher low. But on the contrary, RSI makes a lower low, as you can see here. And for this formation indicates that the uptrend will continue and you can choose to go along or buy the asset. Now, as I said earlier, the easiest way to look for a bullish it and divergence is to look for a market which is an uptrend. Let's use a practical example from hourly chart of stock as BA. As you can see here, the stock is an uptrend. Please notice here that price is making a high low, but on the contrary, RSI is making a lower low. Also note since this divergence is formed between 3070 zone and forming an uptrend. This will be classified as hidden bullish divergence. And France also notice the market direction also continues with the previous uptrend. Then next is perishing and divergence. Now this occurs when price makes a lower high. But the oscillator that is RSI makes a higher high, as you can see here. Now for it's by now you must have understood that this type of divergence occurs in a downtrend. Does the easiest way to look for a hidden bearish divergence is by looking for a security which is in a downtrend. And after formation of bullshit and divergence, you will most probably see continuation of downtrend. Next, let's see a practical example that will make things clear for you. Friends. This is the daily chart of currency equals USD, JPY. You can see the price is making a series of lower highs denoting a downtrend. On the other hand, RSI is making a series of higher highs. In fact, there are back-to-back peri sheet and divergences here. So as for our discussion earlier in the lecture, when you see a hidden bearish diverges, then chances are that the currency will continue to move lower and the downtrend will continue. Those here also the currency we're follows its previous term trend. So keep in mind that regular divergence are possible signal of reversal. He didn't divergence indicates a trend continuation. Next friends, you can also do swing trading using this concept of RSI here and divergence. Once you have spotted hidden divergence, then you can look forward to enter into a long or short rate depending upon either long-term trend is up or down. If price action shows higher lows, but RSI shows lower, lower than you are most likely seeing a hidden bullish divergence. So in this chart patterns you should look for going long. Similarly, if price section shows lower highs, but RSI shows higher highs, then you are most likely seeing a hidden bearish divergence. And you should look for short opportunities. In this case, the best would be to get one or more price action confluences and then proceed with the trade. Let's look at a practical example. This is daily chart of USD JPY. We can see the currency pair is in strong downtrend. Now carefully you notice here that there is formation of a lower high in the price. But when you see it, artist use all that RSI is making a higher high. Moreover, this divergence is forming in-between 37 zone. So there is a clear, bearish hidden divergence. And we can expect that price will continue to move downwards. Now since we can also confirm the entry by using multiple timeframe analysis, just look at a lower timeframe, say hourly chart. And notice market is actually an overbite region here. And this also adds to the confluence of further drop in price. So we can easily short the current CP. Or here. No friends have P's node visuals on other RSI from low timeframe as a confluence for entry. But we can also use other strategies like trendline breakout, Fibonacci, candlestick pattern, or even moving averages for entry. A common mistake that many new creators make when they learn to trade with divergence is that the movement is he divergence from the chart, detect the trade according to divergence. But friends, the fact of the matter is that we need to confirm type of divergence. That is whether the divergence is normal or hidden and wait for future price action to confirm further action plan. Next, fans on important point when trading hidden divergence is the higher the timeframe, the longer is trend continuation. And because of this, hidden divergence tends to work best over longer timeframes. So here is a good cheat sheet which you can use. So if the divergence is normal and prices making a higher high oscillator, that is, RSI is making a lower high than visual clue for cell opportunities. Then second is if type of divergences normal and prices making a lower low while oscillator is making a high low, then we should look out for buying opportunities. The next is type of divergences hidden when price is making a high, low while oscillator is making a lower low. And here we should look out for opportunities. And lastly, type of divergence is hidden, then price will be beginning a whole tie and oscillator, that is, RSI will be making a higher high and we should look out for cell opportunities. Now France, before winding up this important class, I will summarize this lecture as. So first, please remember that regular divergences are for identifying tops and bottoms and reversals. That is bullish regular divergence is for picking a bottom and bearish regular divergence is for picking a top. On the other hand, he didn't. Divergence is for figuring out if a trend will continue in the same direction or not. That is bullish. Hidden divergence is for figuring out if an up trend will continue. And a Beta sheet and divergence is for getting more confirmation that a downtrend will continue. So I hope the concept of hidden divergence is clear to you. 12. RSI Failure Swings: Hello friends, welcome back to another lecture. Friends are inside failures wing is an advanced technique of trading RSI divergence. So let's first see what a failover swing is. Now as we learned earlier, that divergence is a disagreement between the price and the indicator. Normal divergence indicates a potential reversal of trend or a near correction. But the fact is reversal may happen or not. So RSA failures wing is a strategy that in fact confirms a trend reversal and gives trader and entry point. Does it's very important to learn failover swing along with RSI Divergence. Most instructors just each RSI diverges, but Mississippi's important concern. So RSI failures, we will give you a confirmed entry and then you can write the trend putting a trailing stop-loss. Thus, if you apply this conformation strategy in your trading, then you need to wait for failures wing in order to get conform entries. Now failures wings are of two types. First is failures being top, and second is failures when bottom. So let's first see failures when top. Now friends or failures when top takes place when the price makes a higher high. But RSI fields to make a higher high and falls below the recent swing load that is failed point of the indicator triggering a sell signal. Also note during the first high RSI goes above the 70 over board level. While during the second high, the indicator makes us swing high below the 70 overboard level. As you can see here. Now let's understand this in a simplified manner. So don't understand failover swings. Try to concentrate on for actions that are assigned needs to perform before completing the field was when. Now in first app in an uptrend, the RSI reaches its overboard level. Then the RSI is retreats lower and makes us swing low. Then in step three, the RSA rebounds or retry to reach its previous II, but badly fields to reach its previous high and turns down again making a lower swing high. And lastly, in final strap, the RSA drops below the previous law, and this marks the failures weighing and this is nothing but our entry point. French normally overboard level is taken as 70, but Traders can take overboard level as per their trading style. So conservative traders can even take over but level as 80 friends, the entry level is nothing but previous wing load. Let us this level which RSI breaks. Let us take a practical example. Now this is the sort of bank nifty. Just noticed point a where bank nifty rises above 70 level of RSI and enters into the Overwatch region. The RSI then makes a swing low at point B. After this year again rises to point C, which is below the previous being high and also just below 70 level. And finally RSA drops again. And as a trader we get R conformation and take our entry at point D where RSI breaks a level of previous swing low. Next, let's see failover string bottom. Friends or family was when bottom takes place when the price makes a lower lobe. But RSI fails to make a lower low and rises above the recent swing higher. That is fail point of the indicator, which triggers a buy signal. Moreover, during the first law, RSI goes below 30 oversold level. While during a second low, the indicator makes us when low above the 30 oversold level. Just noticed this shorter Bosch limited. And please observe this boorish divergence. Notice prices making lower low, but RSI is making a high or low. Now let's focus our attention on RSI. Notice RSI made low at point a below 30 level. Then Ariza move higher and make a high at point B. But RSI could not sustain the move and drop-down making another low at 1 z. But friends this time at a higher level than the previous law and also above 30 RSA level. Now once the RSI again moves up as a trader, we should look forward to take trades using RSA field was when? Now as soon as the RSA breaks point D, which was previously high, we should take our entry. That is, we will take a long position here. Ideally, I place a stop-loss, blue P will swing low. Now France regarding target, always use trailing stop-loss and so get maximum profit out of any particular trend. As you can see, this was a very good profitable trade. But still if you are not used to trailing stop loss, then you can use a target as previous swing high as per your risk-taking abilities. So friends who failures wings are clear to you and also how you can create using this film were swings. The only downside here is dad that you may get lesser trading opportunities. But once you find these Formation in your chart and Dijon rates some highly profitable trades. In one of the trading set of, uh, heard in the course, we will look at another entry confirmation setup using credit lines. 13. RSI Range Shifts: Hello friends, welcome back to another important session. Friends. When RSI was initially developed, it was used by most traders as an indicator that can work only in sideways market. But Andrew Card, well, one of the key exponents of RSI went into depth of RSI and discovered that RSA can be used for both trending as well as non-trending markets. Now this was against a common thought at that time that RSI is only useful in non-trending or sideways market. So France card well through his extensive research, introduce some, introduce some powerful concepts like RSA is redshifts, which are now used as key to understanding the markets behavior. So let's look at RSA re-shift in this class. So what is redshift? Friends RSA and red-shift occurs when values of RSI shoots from a predefined range to another predefined range with respect to price action of the underlying asset. Now, if I tell you in layman language than range shifts simply guides us whether the market is in bullish or bearish mode. So for instance, this occurrence of redshift guides traders regarding market rent and helps us to accurately just the market rent. Now as per third, well, there are five types of wind shifts. So first is British range, then second is super bullish range, then third is bearish range. Then fourth one is super various range. And last one is sideways market. Now let's understand each one of these in detail. So first one is bullish range. Now France, when a stock is an uptrend, it is observed data as I diverges from its normal oversold level of 30, rather it oscillates between 40 on the downside and 80 on the upside. So for instance, if the RSI is taking support at 40 level, then this indicates that the trend is bullish and as a trader you can easily take 40 years. Oversold level is sort of default CO2 level. Similarly in an uptrend, overboard level also shifts to 80 instead of default 70. As an example, just noticed this shorter birds are veins. Although how beautifully RSI is the spectrum this 840 level during this uptrend, you can see RSI really crosses below 40 and above 80 and friends. This is not a cherry-picked example, but there are countless charts with pattern like this, which you can observe across all asset classes. The next is super bullish range. Friends. When a stock is in strong uptrend, it is seen that RSA struggles to dip below 60 level. It in fact oscillates between 60 on the downside and an 80 on the upside. So the inner beauty of the RSI to go below 60 indicates that a security isn't super bullish mode and it's showing resistance at lower prices. So any depth to this new oversold level of 60 can be a good level to get entering into the trades. Just notices are leached out of birds or paints. Notice how the stock and then strong of trend from here to here and now just absorbed the RSI down below. It is simply respecting this 60, 80 level. Though RSI once broke 60 level here, but the momentum was so strong that it again when back above 60 and again started respecting the 60 level. So for instance, as you can see, RSI is indeed helping us to even measure the strong Buddhist friends. Next, let us see bearish range. Friends when an asset classes in downtrend, it is absorbed at the RSA's resist from rising to the traditional overboard level of 70. Rather it oscillates between 60 on the upside and 20 on the downside. Now this inner beauty of the oscillator to reach the default over what level of 70 indicates a weakness in the security. And hence, whenever the asset class reaches the new overboard level of 60, a trader can take short for lesion or sell the security. Let's see a practical example of be reshift. Just look at this chart of commodity gold. Notice that gold is in a downtrend from here to here. Now when you observe the RSI age, you will be surprised to notice that it is respecting the quantity 60 level beautifully. Now again, you will observe this trend in countless other jobs. So friends who just saw how the range of RSA shifted and 1620 it is sort of default 73 when the asset classes in perish phase. Or in other words, when the asset classes and bearish phase, then you oversold level can be treated as 20 instead of default 30. And the overboard level can be considered as 60 instead of default 70. Then let's use super bearish range. Friends. When a stock is in strong downtrend, it is observed at the RSI finds it difficult to rise above 40. It in fact oscillates between 40 on the upside and pointy on the downside. Now this inability of the oscillator to go above 40 shoulder stock isn't super various ways. Hence any rally of RSI to this new over what level of 40 can be considered as a good opportunity to sell. Let's use a practical example. Please observe this nifty 50 chart and notice how the indexes in Syria downtrend after this. Now as well as the downtrend become more strong. Notice how RSI is respecting this 2040 level. Just above here. When RSA took a turn after hitting 40 level, does it have strong bearish move 40 x and a strong overboard level? And lastly, let see sideways range. Friends when a securities trading within a sideways range, it is observed that the RSI oscillates between 40 on the lower side and 60 on the upper side. During this period, 60 RSA level acts as a strong overboard level and for PRSA level access from oversold level. So what rate of can go along at 40 or as I level with a target of 60 RSI. On the other hand, one can go shoot at 60 RSI with the target of 40 RSI. Let us again understand this with the help of a practical example of stock, EITC limited. Friends just noticed this region where the stock is having a sideways movement. Now when you observe the RSI below, you will notice that it is expecting 40, 60 inch. Now the traders who can notice this sideways movement can even make money in this sideways market. Mostly either say, it's very difficult to make money in sideways market. But RSI is one such tool that will make you money even in confused markets in our US. As you can see in this chart, if you buy and sell at these shifted overboard and overfull regions, then you could have executed profitable trades. Now French till now, we have learned the types of redshifts, but how you can actually use this in your charts. So to understand this, let's use a practical example. This is our leach out of Sun Pharma. In this chart, you can see how the range of RSA shifted from sideways, betters 40, 60 level to bullish, that is 48 levels. And then to bearish, let us go on to 60 levels, which was in fact similar to the respective sideways, upward, and downward movement in price of the stock. So as you can see how a trader can utilize this knowledge of re-shift to improve the trading performance and thereby taking trades in concurrence with a market momentum. 14. Improving Your Winning Probability: Hello friends, welcome back to another lecture. So in this lecture, Let's see how RSI can be used to increase our winning probability. Well, as had been trading, always trade with the trend. And this is in fact the holy grail in trading. Just identify the trend and then write the trend as long as possible. Trading with the trend actually generate some maximum profit for the Traders. Now to use RSI for trend determination simply changed the orange I period to 200, as you can see here. And just plays an extended trend line at RSA equals 50 level. Well, you can also change over water ozone levels to 50. This will also, you will see a horizontal line at RSA equals 50 level. Now offensive, RSI is hovering over 50 level, then it is assumed at long-term trend is up. On the other hand, if RSI is below this 59, then it is assumed that long-term trend is downwards. But please note if RSI is moving around this 50 line, then this technically indicates that long-term trend is sideways. Now for instance, this is a very objective setup and traders who are confused with marking those higher highs are higher or lower than this framework actually provides you an easy way to identify the long-term trend. So let's understand this concept with the help of some examples. Now this first example is of HCl, and as you can see here, that the RSI is hovering above 50 level from here. And this indicates that the stock has entered into long-term bullish territory, which as you can see, is also evident from the moment of this stock here. And as you can see here that RSI enter this long-term bullish directory first here, and then here also. And it's still in this territory as on date of making this video. And I'm both locations you can see there were some good profitable trading opportunities. Now for instance, this strategy is very useful, especially for investors. Just identify blue-chip stocks, are stocks with good fundamentals, and then wait for these dogs to enter a bullish territory. And then you can write this long-term trend as long as RSA comes back to this 50 level, again, the probability of successful trades is indeed very high here. So you just need to be patient here and wait for your opportunities. But profits are indeed huge. Hero. Constantly scan stocks for this setup and also to identify a long-term trend for my other trading setups. 15. How to Screen Stocks for Trading using RSI: Hello friends, welcome to this lecture. Now for us, this is one of the most common caution that many thetas ask. That is, how should I screen the stocks for trading using RSI? Friends even after spending sufficient time in market, most readers are still confused with stock filtration. Most often they depend upon some morning business new suggestions or other you do analyst or even their broker for the tips. Most instructors tell this and that. But the fact of the matter is that there are thousands of stocks in the market. So in this lecture, I will explain you the stock filtration strategy, which I personally used to filter the stocks. Friends, I use this strategy to filter the stocks on weekends. Using this strategy, I find some high probability is setup for next week. And then I just focus on execution in the week ahead. I basically use this filtration process to find reversal trades. So I simply use investing.com's free scanner. The specialty of this scanner is that it can be used to filter stocks of any country. Now, as an example, I will show you the filtration strategy for Indian and US stocks, but you can use it for any other country based on the explanation which I will give you for using the screener. So let's see, for Indian stocks, friends, we will select the stocks with closing price greater than a 100. Now the reason for this is talks less than a 100 are often easily manipulated. So we will avoid such stocks and other penny stocks also. Next we will use volume greater than a 100 thousand. Here also, low volume stocks can be easily manipulated. So we will filter all such talks as well. Next, I will use RSI 14, and in this I used to RSA oranges. First is 0 235, which filters are stocks that are in oversold region that is 0 to 30, or approaching oversold region that is 30 to 35. So first this way we will get the stalks in which we can go long. Second group of stocks we get is by using RSI in the range of 65 to a 100. Notice filters or stock that are in overboard region, that is 7200, or the stocks that are approaching the overboard region, that is 65 to 70. So this way we will get the stocks in which we can go short. Now for the US markets also, I would advise the screener as last price greater than 20, volume, greater than a 100 K. And then again two groups of RSI aid. That is, we get first group of stocks with RSA 65 to a 100, and second group of stocks with RSA 0 235. Now friends please note that our target is to find 25 to 30 high probability reversal candidates during the screening process. So this is the screen of investing.com screener. And also note it's a free screener. Your first step is to select your country here. So just choose a country from this drop-down list. Next, we will select the price tab. And then last price. Friends, as you can see at this moment, we have 5,984 stocks to choose from. Now when we enter a 100 here, this will filter all the stocks with price greater than a 100. Next, we will select volume here and enter a 100 thousand times initial value. Finally, we will select RSI from technical indicators and just entered the value 0 235 like this. When you click here, you will get the list of stocks which are either in the oversold region or approaching oversold region. And just notice here that we have screened around 12 stocks out of 5984 stalls, which is really a great achievement. Similarly, we will screen out the stocks in overboard region or nearing overboard region. We simply changed the RSI value now to 65 to a 100 here. So when we click, we get a 105 stocks. Now first, this is a basic filtration process I use to filter stocks that are tough candidate for reversal using RASIC as well as candlesticks trading setups. Please note this is just a list of top candidates that can make reversals. In next lecture, I will show you how I apply price action to actually execute these trades. By applying price X and strategies, you will finally be left out with hardly ten to 15 stalks with a very high probability of reversal. So I will see you in next lecture. 16. Price Action Trading Setup using RSI: Hello friends, welcome to this new lecture. For this lecture is in continuation to previous lecture where we shortlisted the stock for swinger positional trading. In this lecture, I will explain you the entry into the trade. So for now I simply use price action for high-priority reversal rates. Now suppose I have shortlisted the stocks which are in overbroad or approaching overboard region as per our shortlisted criteria in the last lecture. Now after this, I will manually observe or analyze the charts of all these talks and observe the following points. Now first to check is if the price is approaching a major resistance zone. And second confluence I add is the formation of a strong bearish candlestick pattern. So graphically as you can see, we have already shortlisted the stock based on RSI. Now after this, we will wait for the stock to reach a previous resistance zone and also formation of a bearish candlestick pattern, as you must have learned in my candlesticks course. So by getting as many consequences as we can, we will take a short position at this level once a prize enters this zone. And we will put our stop-loss above this resistance zone. Now for us as far as target is concerned, I always trail the stop-loss. For those who wants a fixed target, then you can use previous swing low Azure target level. So when I hope the overview of the strategy is clear to you. Now the reversal is true for the stocks listed in oversold region. So for them, we should look for first if the price is approaching a major support zone. And second conference I add is the formation of a strong bullish candlestick pattern once the price reaches it supports own. Friends. I implemented this strategy in short, listing the stock Congo recently. This dog had a good volume price above a 100 and RSI was also less than 35. Now price action also confirmed that price is reaching a very strong support level. As you can see in this zoomed out chart. The price is in fact bouncing of twice here. That is, first here and 10 here. And now again, the price, same territory. So I simply waited for the stock to raise this support zone. Please note, we will note under here as soon as RSI enters oversold region. And the reason being price at this point has not reached any area of interest that is supports on as per price section. And you can also see that had we entered long here just on the basis of RSA being oversold region, then this would have been a loss-making grade because price moved further down or RSI remaining oversold territory for quite a long period. So as per our trading strategy, we will wait for the price to enter this support zone. As you can see, the stock entered the support zone here and RSI is still below 30. Does our final step will be simply to wait for formation of any bullish candlestick pattern, which will give us a green signal and we will enter into this rate. Now just open up this formation of a long bearish candle denoted by one. Followed by formation of a spinning top like handle denoted by 2, which in fact shows a indecision in the market. And finally, next day we had a long bullish candle denoted by three. Now this three candlestick pattern is nothing but a Morningstar as we have learned in our candlestick course. Yes, it might not be a perfect Morningstar, but asset in trading go by psychology of candlestick pattern and not looking for perfect patterns in trading, we will never get perfect looking patterns or setups. Just read the psychology of this pattern. Long bearish candle, followed by formation of a indecisive candle, which had an abdominal pain. And this follows along green candle showing that bulls are back in action. So thanks. Once this happens, we will enter at this level, data is open off. Next is Candle. Stop-loss me with the swing low. And target as far as strategy must be previously high. But please note this week I will be too aggressive target. It's better to book 50 percent profit at mid-level that is there. And rest. You can look once this actual target is achieved. But as always, it's better to trail your stop-loss to write the wave higher. So friends, I hope the strategy is clear to you. You can tweak and twist the strategy as per your trading style. Let's see another example. This is daily chart of currency pair GBP, USD. And as you can see, the currency pair is in downtown. And here, we also notice that that it's approaching a major support level. That is this. The RSI also enters overs or region. So should we take long position in this currency pair? Well, not now, but we have to wait for the formation of a bullish candlestick pattern. Please note this long candle is followed by formation of a long green candle, which loses above this candle. Now if you have seen my candlestick gold, then you must have observed that this pattern is nothing but a bullish railway track pattern. And this is in fact a very strong boorish signal. So for us, we've got our final confirmation and we will enter into a position at this next scandal which stop-loss below this railway track pattern. Our target as per our strategy will be this previous swing high. But as you can see, this would have been a very aggressive target. So it's better to book 50 percent profit midway Daddy's here. But ideally you should train your stop loss and right away higher. But anyhow this was a profitable trade. So France, you can see combining RSI with price action provides some high quality and high poverty rates. As I said earlier, taking decisions purely on the basis of indicators is a main reason why most readers lose money. Always combine any indicator you use with price action to generate profitable rates. Price action is in fact king of technical analysis. 17. Modified Conners Setup: Hello friends, welcome back to a new class. So friends in this class we will learn a pullback trading strategy using RSA. Now, all credit for this strategy goes to Larry corners. He's one of our mentors and this strategy is based on my learnings. Though this is not exactly the same, and I have to state the original setup based on my testing and actual markets. Now for it's a problem with most readers is that they tried to catch the tops and bottoms of the market, which is in fact close to impossible. And moreover, it's year. We used to offer precious time. You can catch those corrections or retrace my hands as we saw in previous price auction trading setup. But catching tops and bottoms of the market, for example, catching the bottom of the COVID fall of 2020 is very tedious. We all are here to make money. So why waste our energy in catching tops and bottoms? Just cashed those minor moves and make profits. So in this strategy, we will do exactly that. We will catch those minor retrace my hands in long-term uptrend. And since the long-term trend is, does we will go along vertices. Minor corrections are over. Now friends please note I don't use this strategy for shorting. Since I believe in long run, the markets tend to go high. Just either beer markets of 2000 ate or recent COVID 2020 crash. Though markets all over the world went down, but the bounce-back strongly. And within a year, markets all over the world mid, all-time high. So I give this strategy for long-term, it is only. Now let's see the rules of this strategy. Now the strategy type is swing trading. Then this strategy works for strokes, forex, and commodities. That time period to be used as for R or above. Now for its long-term trend must be for this strategy. Friends for this, we will look to a 100 meter moving average. Or you can also use RSI 50 level to just a long-term trend. This concept we have discussed in one of the previous lectures. But here I am using 200 period moving average for simplicity purposes. So if the price is above 200 period moving average, then this would mean that long-term trend is up. And we will take our pollution only if this condition holds true. If not, then we will skip this rate no matter how tempting the opportunity is. So with respect to this grading setup, it will be a big no-no. The next trend for entry, we will wait for RSA 14 to move below 30 level. And once this happens, we will take our position at very next candle. I most often trade the setup on the daily timeframe and take my position very next day. No friends. If you are filling bit confused, then please don't worry. We will do some practical example I had which will make the setup crystal-clear. Then of course, what will be our exit point? Now friends, ideally, you should write your profits as long as possible by putting a trailing stop-loss. Or if you want to fix target, then you can target previous when high as your target. If you think it's possible as proprioception. So for instance, you can choose your target as per your trading style or as per your risk-taking capability. I will leave this up to you to decide which exit strategy to use. Well, I personally exited R is I equals 50 and capture that movement, take my profits. Friends. Lastly, corners didn't use any stop-loss in the original setup. But to be on safer side, if the trade doesn't go as per setup, then I exit after ten candles. So these are all the rules that you need to know before we dive into practical examples. Next, let's see some practical examples to get the setup crystal-clear. This is the daily banking art and as you can see, the current trend is up as prices above this to 100 period moving average as shown in blue. Now, just notice here that RSI 14 goes below 30 here, and this red kind of closes with RSI get quantify 0.76. So we should get ready to take our trade very next day as for our trading strategy. So friends v entered around here and we will exit Ones. Rsi hits 50 level. As you can see, RSI hits 50 at this candle, and so we will exit at this level. So friends via taking small province from this model really without worrying about whether market made a bottom or top. And this is what trading is all about. Just take your pi from the cake and remain contended. So you can see we got our entry at around 18 thousand to an exited here at around 18,875, which was a prophet of rupees, 873. Friends. Similarly, you could have also taken this trade as denoted by two. Here also RSI goes below 30 and price was above 200 period moving average. And here also our trade was profitable. Now fence at this third instance, please note that this candle opened up to 100 meter moving average. And RSI also went below 30 level since this candle close below 200 period moving average. So we will leave this trend has changed from uptrend to downtrend. Friends hope this setup is clear to you. Then this second example is from euro-USD. This is daily chart of currency pair and as you can see, price is trading above 200 period moving average. So as soon as RSI goes below 300 here, we will take our entry at very next day scandal titles here. Now the RSI cost 50 mark at this candle. So we will exit the trade at this level. And as you can see, this was a good profitable trade. If we took our share from this rally and executor this level. Then this last example is of S and P 500. And as you can see, the price is trading above 200 period moving average here. At this point the RSI enters the oversold region. And so we will get ready to take our entry at very next scandal that is here. Now after this, we will wait for RSA to reach 50. Now firms are SIDs 50 at this candle, and thus we will close our trade at this level and thereby taking the profit from this MOOC. Friends, I hope this simple but very effective setup is clear to you. You can also take short rates using this data by just reversing the trading rules. But friends, the only downside of this setup is lesser number of grades. But the effectiveness of this setup makes the setup extremely important in your trading arsenal. You should always look out for this setup on your charts. And once you get this setup, then don't miss the opportunity. Now to get more trades, you can simply use any screener and just screen out the stocks or currency pairs where RSI is in between 0 and 35. Once you get the list, then screen out all the stocks of currency pairs where 200 feet are moving averages below the price, that is trend is up. So with these two screeners, you will get the list of stocks of currency pairs which are in your trading zone. If you are a working professional than once a week, just clean out the stocks of currency pairs and then keep these in your trading radar. No fancy psychology behind this setup is that since the long-term trend is up, so once the prize enters oversold region, the probability of reversal is extremely high in upward direction. So with this, I wind up this lecture. So thank you and I will meet you in next lecture. 18. Confirmed Divergence Trading Setup: Hello friends, welcome to this session. Friends. In this lecture we will look at RSI Divergence trading setup. Nothings taking decisions only on the basis of RSI divergence will be guessing only. So it's better to always confirm this divergence. So in this trading strategy, we will use a trend line to confirm the divergence as real or fake. Now you can use this strategy for hourly or above timeframe and RSA to use this 14 period RSI. So let's understand the set-up with the help of some practical examples. Now this is a daily chart of S and P 500. And please note this bluish divergence information here. Now this divergence will get more clear once you convert this candlestick chart into a line chart. Just notice here that price is making a lower low. On the other hand, RSI is making a higher low. But fence again, taking the trade simply on the basis of this divergence is not only risky, but also a guesswork. So it's better to take conformation before entering into a trader. Now please pay attention here. So for confirmation, simply draw a trend line taking these two swing highs. Now France, this is nothing but resistance. And if price breaks this resistance, only then we will take our entry. Now just notice that price breaks this trend line here, and this gives us a go-ahead for the trade. Now the targeting, this strategy is generally this first week high, and second target is this previous week high and so on. Stop-loss is generally placed at this Winslow. And also to write the profits IR, you must really your stop loss. So as you can see, both these targets for achieved easily in this raid. I will again repeat for best results, always trail your stop-loss. So when I hold the setup is clear to you. This is simple but very effective setup. Now the second example is of the stock at UL, and this is a four our chart of the stock. Now please note here that price is making a higher low. But when you notice RSI, you will absorb that RSI is mega high-low. Thus there is a clear boorish divergence. So chances are there that price may reverse after this formation. But France, again, we can't read just on this guesswork. We will enter into the trade only if price breaks this trend line. This trend line is in fact acting as a resistance here. And when the price breaks is trend line, this will give us a go ahead for the trade. Our first target will be the swing high, and this is achieved here. And second target will be this wing high, which is also achieved here. So as you can see, it was a good, profitable trade. Novels also note here that this divergence took place at a major support level, which in fact increase the quality of this red. But anyhow we will only enter versus resistors trend line is broken. So I hope this setup is clear to you. Let's see the last example before I wind up this lecture. This is a four our chart of currency per GBP, USD. And as you can see, prices making a higher high here. When you look at RSI, it is making a lower low. Thus there is a clear bearish divergence. The quality of this trade is also increased when we look at past price action. And so that this divergence is for me at a previous support zone. And saw that this divergence is forming at a previous strong support level, which after break out here will now act as a strong resistance. But once we will not take our entry here, we will get our conformation only after price breaks, this trend line, which is acting as a support here. And as you can see, the trend line is broken hair, and thus we will take our entry at around this level. Our first target will be this wing low, which was hit here. And second target, that is this previous Swing Low was also hit here. So as you can see, this whole a good profitable trade. Friends, I hope all these examples are clear to you and also setup is crystal clear to you.