RSI or Relative Strength Index indicator is bounded momentum based technical indicator that attempts to predict a change in momentum. However, even if you think that you have a perfect opportunity to enter a trade, you have to take into account other technical factors which could also have an impact on the price at that point in time. RSI Indicator, click to enlarge. Taking a look at an example, in the image to the right, we have the eurchf currency pair with the macd lines plotted below. Histogram: macd Line Signal Line, the macd was first developed in the 1970s by a man named Gerald Appel.
There is also a histogram which measures the best platform to trade cryptocurrencies difference between the macd line and the signal line. Also, the currency pair must take sharp turns because this strategy wont be applicable on a range-bound currency. Do not discount the divergence though, it is still a powerful tool and gains strength when used along side other tools. Savvy traders could have entered positions when prices fell back below the retracement level with expiries of one day up to a week and then again once prices broke the moving average. Look at the chart below. This is a bearish indicator. Taking an oscillator such as the macd for example we can see on the chart below a classic divergence between the series of peaks in prices and the series in peaks in the indicator. The words Suck, Scam, etc are based on the fact that these articles are written in a satirical and exaggerated form and therefore sometimes disconnected from reality.