RSI Divergences

Sorry Jackozy and Diver but you just cant leave this thread like this, far too much good debate going on, calm down and lets see what we got so far.

Diver has identified what EWT really needed (IMO), a method or rules to start and end waves, ok so it was not available to Elliot and is not every-ones answer. But EWT needs to be less subjective.

Jackozy - I understand the question, How does the Dow correct to new highs ? in the same direction as the trend, Wave B of an expanded flat ?

Hi B-r

I don't have any problem debating anything but there seems little to be gained by trying to have a discussion with someone who responds with "You think I'm wrong but I know you're wrong".

Question: if RSI was invented in 1978 and is probably the most widely used indicator, why has nobody else ever noticed that you can use divergences in it to guarantee a wave 5 top 100% of the time? The answer is simple: you can't. It happens a lot but not 100% of the time. I'm pretty sure Prechter might have noticed.

I have backtested it myself extensively. In fact, you can't even rely on an RSI divergence as a trend change pattern all that well.

I don't mind if diver wants to have his own wave theory, but Elliott's it ain't.

Broad-rock,

For clarity I have never said this will identify the start or end of waves. What I do say is you cannot have a motive wave without an RSI divergence between the third and fifth waves. This is slightly different in that you can always have an extension to a wave. If it is a motive wave then, of course, you would also have a similar divergence in the extension. It must be so purely from the characteristics of a wave 5: it lacks 'strength' when compared to its counterpart, the wave 3, because the wave is ending. The RSI measures 'strength', hence this is a powerful tool in identifying motive waves from ABC's.
I know many people struggle with EWT, especially the labeling, hence my reason for bringing this to their attention. I don't claim to be 100% in my labeling, far from it, and I know it is impossible to be 100% correct, sometimes until after the wave 3 completes, as waves 2 and B waves can retrace to similar percentages. But, it's the RSI divergence which gives the game away and identifies the five-way wave as motive. Jackozy disagrees. Fine. But he already has his method. I brought this subject up to assist those who would like to learn but are struggling with the complexities not for those with closed minds stuck in 1938 sorry....couldn't resist the pop!
Might I suggest those interested folk take a dispassionate look back over their favourite charts and just see if they can see what it is I've been rattling on about.
That's all from me on the subject and apologies if this thread has caused any upset.

This is a good thread.
Diver/Jackozy
People will have different opinions when it comes to Elliott wave that is a given. I personally have created my own version of elliott as many know. I dont talk about it as its pointless and it almost drove me mad when i was trying to teach it.My method uses candlestick charts but im not gonna teach this method so dont ask Ive got my reasons as most know from the days of the private bb

Just agree to disagree on this matter as there is always more than one way to do things.
My methods of trading are different from conventional methods a lot of the time and this board is about trying to show what works for each other . No one is wrong as long as it works for you and you only will know .
Proofs in the pudding

You guys have not been offensive to each other so keep it that way. Just dont get personal like others have.
good thread as its very helpful to others to learn about RSI.

Agreed remo - one thing that must be noted is:

R.N. Elliott simply did not have enough data when he developed the theory. We have the tools and time that he did not. also the market has changed significantly through the use of technology since then... introduction of electronic trading and financial instruments.

what is commonly accepted practice, to what actually occurs contrary to common practice is another......

Thanks guys.

FWIW I think I've been pretty reasonable and balanced in my input to this thread. I totally understand that market analysis has moved on since the 30s (far from having my head stuck there) and have agreed that RSI divergences commonly DO occur at the end of motive waves.

On the other hand, I think it's misleading to tell people that they MUST occur as the pre-eminent condition of determining what can constitute a motive wave. This can lead to extremely confusing, not to say rule-breaking (if we can even use that term as relevant), counts.

I think we'd all agree that no system or method of analysis is correct 100% of the time, yet here we have diver purporting a 100% reliable requirement of a motive wave. It simply isn't so and to tell people otherwise is making a difficult subject even more so.

I'm quite happy to agree to disagree, but I don't think it's necessary to have to be subject to arrogant jibes ("You think I'm wrong but I know you are") and schoolground "pop"'s that my thinking is stuck in 1938. What sort of way is that to conduct an adult debate about a serious subject?

During this discussion, I haven't claimed that anything is categorically true 100% of the time yet I'm being told that I'm definitely wrong simply for pointing out that diver might not be 100% correct? I think a touch of humility might be in order here. Surely we can have a debate without trying to bully people into an erroneous way of thinking?

I will re-iterate my view one final time on this subject before I hope we can move on: RSI divergences do commonly occur between 3rd and 5th waves in an impulse wave but their lack of presence does not automatically rule out the possibility of such a wave. I fervently wish there were such a simple rule to help us with this difficult subject but there isn't. That's why so many find it so hard.

Now then, can we please move on to discuss RSI divergences on their own merit on this thread without reference to EWT as I suspect we'll not move on from here. I've read John Hayden's "The Complete RSI" and have some interesting findings, some of which I was aware of and others new to me; all of which may be of help to us all in trying to win in the markets.

Thanks again.

PS Broad-rock, I quite agree that it's possible to have a corrective wave make a new high in the form of an expanded flat (or running flat) but it would be the B element of that correction which did that rather than the A element which MUST be lower that the preceeding trend's high. An expanded flat would then usually have a C wave below the A whereas a running flat (very rare) could have a C which ends above A.