RSI Divergences

hey i like waves so here my two penneth worth....

Third waves can have the follow relationships to wave one: 0.618, 1.0, 1.618 and 2.618.

Fifth waves can have a relationship to wave three, or wave one, or the combination of waves one through three.

imo it dont have to be 1.618

Regards,

WS

This is a really good thread, some great comments and opinions.

It would seem that there are different opinions on requirements for systems based on Elliots.

Wouldn't work if we all did the same thing..

RSI used correctly, like Jackozy has shown many times, is very useful.

On Grennhill. If you look at the RSI you will see the wave formations quite clearly as the RSI follows the characteristics of the waves and this, in turn, will help with your understanding of EWT. Also, if you use trend lines within the RSI the formation become even clearer. In fact, without using the RSI, labeling wave formations can become very confusing. Hope this helps.

Hi Diver,

All that really matters is that we each have methods which works for us so as long as yours works for you then that's ok and all's good. I spent a LOT of time a couple of years ago back-testing the idea that a wave 5 top could be confirmed using RSI divergences and the conclusion was that it cannot as they don't always occur. I did this work with another who I consider to be way more advanced than me when it comes to EWT (I learnt a huge amount from this person) and we agreed with our findings.

You wrote: "I disagree with regard to the minimum requirement for a wave 3: if it doesn't make at least 1.618 of wave 1 it is an ABC and not a wave 3. Anyone who claims otherwise is trying to make their labels fit their count.
So, let's agree to differ for the time being but, I'm confident you will come to appreciate the validity of these statements in due course"

I'm happy to agree to differ here but I think our disagreement on this will be for a bit longer than "the time being"

It is quite clear in the Comprehensive Course on the Elliott Wave Principle (and other texts on EWT) that it is NOT a requirement for wave 3 to be a minimum of 1.618 of wave 1. The only rule regarding wave 3 length is that it must not be the shortest of waves 1, 3 or 5. Wave 3 can even be shorter than wave 1 (as WS has pointed out) as long as wave 5 is shorter still, though this is rare.

Hope that helps but, as I said, all that really counts is whether our own methods work.

Hi On Greenhill, sorry for the delay in coming back to you.

You're probably already familiar with bullish and bearish divergences, yes? If not then either visit remo's learning section or just say and I'll clarify those on this thread.

Positive and Negative divergences are very different. I was made aware of these only in the last year or so by a technical poster on the GKP BB called Rcmacf if I recall correctly. I can't remember where he got them from They don't appear too often but can be used to confirm trend continuation and are therefore very important.

A positive RSI divergence can occur during an uptrend where prices drop to form a higher low (obviously during a correction/consolidation in the uptrend such as at a wave 4 or a subwave 2 or 4 of 3) but the RSI drops further and makes a lower low when compared to its level at the previous price low.

A negative RSI divergence is the reverse; prices make a lower high during a downtrend but RSI makes a higher high.

Sounds confusing in words so here's a simple picture in a link: dl.dropboxusercontent.com/u/20815047/%2B...SI%20divergences.jpg

If you search online you wil find that these are very often confused with bullish and bearish divergences but they are very different and are used for very different things. Bull and bear divs are trend change patterns whereas +ve and -ve divs are continuation patterns.

They're also known as Momentum Discrepency Reversal Points.

Try looking for a pdf of "The Complete RSI" by John Hayden. (If you find one please post it - I'm looking for that myself!).

Hope that helps!

OG, here's a link to that pdf: mediafire.com/?ed0fb7b7t3e6y6l

GL