The ideal technical indicator, according to Andrew Cardwell, Jr. Cardwell said most traders who use the RSI focus their attention on trying to identify bullish and bearish divergences. He said basic price and momentum divergence can and does help to identify extreme overbought or oversold conditions in market momentum. All would be right in the world if markets were to reverse from simple divergence.
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The ideal technical indicator, according to Andrew Cardwell, Jr. Cardwell said most traders who use the RSI focus their attention on trying to identify bullish and bearish divergences. He said basic price and momentum divergence can and does help to identify extreme overbought or oversold conditions in market momentum. All would be right in the world if markets were to reverse from simple divergence. But there are times when sentiment and momentum are so strong that the market continues to make new highs or lows , which will keep the RSI at overbought or oversold levels for extended periods of time.
After these brief respites the market is then ready to resume its normal upward downward trend. With each successive new high low and divergence formed, anxious traders are ready to call for a top bottom and reversal of trend. However, in strongly trending markets, multiple divergences can and do develop, which only lead to corrections of the overbought oversold condition of the market. While Cardwell takes note of divergence, he said that only shows the market is overextended and needs to correct the overbought or oversold condition.
Even though the RSI is considered a momentum oscillator, he said it has more values as a trend-following indicator.
As the market trends higher or lower I will adjust the normal range of RSI to account for the shift in market momentum and bullish or bearish sentiment on the part of the traders.
The fact that this adjustment needs to be made in the range of RSI is one of the first indications that the market is undergoing a trend change. The ability of a trader to recognize a trend change quickly, reverse a position and trade in the direction of that next trend is the skill that traders must develop to be successful, said Cardwell. Economic Calendar Charts Newsletter.
How to effectively trade using RSI range shift – the Andrew Cardwell way?
Making Money. First Name. Last Name. Glad that you're here, we've been waiting for you. The RSI has inherent characteristics that will help you identify and analyze the four basic and key components of successful trading and investing -- price, momentum, time and sentiment. Traders who have studied my work as course students already know how powerful and dynamic the RSI is as a trading tool.