TAILIEUCHUNG - Forex Strategies for High and Low Volatility Markets_5

Tham khảo tài liệu 'forex strategies for high and low volatility markets_5', tài chính - ngân hàng, đầu tư chứng khoán phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | MASTERING THE CURRENCY MARKET that the market proved us correct right away so that we did not have to sit through any kind of drawdown. The RSI is also effective in identifying support and resistance in the market by monitoring the different levels of the RSI. Just as we can draw trendlines that act as support and resistance on the price chart we can draw trendlines on an RSI chart that may act as support and resistance. By going back and studying the charts you will find that often we will see the same levels proving support or resistance on the RSI depending on the current trend. In a very strong market the RSI 50 level will prove support as price will bottom at the same time the RSI finds support at this level. In a more modest up move price may bottom out when the RSI is at 40. In a downtrend we may see price start to top out when the RSI gets to around 60. In Figure 7-16 we see how a resistance line for the RSI between 60 and 55 for the week of August 11 telegraphs a down move in EURUSD whereas the support level angling up from approximately 30 to 35 a week later precludes an up move. The RSI is also effective at showing divergence as can be seen in Figure 7-16 where the RSI bottoms on August 15 and then creates an uptrend before the price actually bottoms on August 19. Just as the market respects the support and resistance levels created by isolated lows and highs the RSI s isolated lows and highs become significant support and resistance levels and are well worth reviewing. The RSI is an important indicator in that it is an excellent gauge of underlying strength as well as being an effective determinant of support and resistance independent of price points on the chart. 180 TECHNICAL INDICATORS Figure 7-16 RSI Provides Support and Resistance Independent of Price Commodity Channel Index The Commodity Channel Index is a momentum oscillator that is considered a leading indicator. It was designed by Donald Lambert to identify cyclical turns in commodities. .

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