Discussing the article: "Price Action Analysis Toolkit Development (Part 13): RSI Sentinel Tool"
Thanks you Chris once again for your well thought out and helpful articles . Much appreciated as a template for me to modify . I also appreciate your erudite thinking and practical implementations. For me I had issues with EvaluateSignalsAndPrint , it is written the function returns Error Copying Compete close data for evaluation . The last error is '4003' . I am not smart enough to work out why when using the WHOLE_ARRAY variable the function fails . For me if I replace the 'WHOLE_ARRAY in the copyclose with a count of the closed bars I can get a returned 'Backtest Signal Evaluation' . BTW I am in a strange time zone GMT +13 and sometime have issues with local and server dates and times but maybe this may help someone
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Check out the new article: Price Action Analysis Toolkit Development (Part 13): RSI Sentinel Tool.
Price action can be effectively analyzed by identifying divergences, with technical indicators such as the RSI providing crucial confirmation signals. In the article below, we explain how automated RSI divergence analysis can identify trend continuations and reversals, thereby offering valuable insights into market sentiment.
RSI divergence occurs when the Relative Strength Index (RSI) moves in a different direction than the asset’s price, signaling a potential shift in price momentum. This contrast between RSI and price action is a key indicator that traders use to anticipate market reversals or trend continuations. Typically, the RSI follows the price’s momentum, thereby confirming prevailing trends. However, when divergence appears, it reveals a discrepancy that often precedes a significant price movement. Recognizing these signals early can be crucial for timing market entries and exits.
In the context of RSI divergence, there are two main types
1. Regular RSI Divergence
Regular RSI divergence is generally seen as a reversal signal. It indicates that the current trend is losing strength and may be about to reverse.
Occurs when the price forms a lower low while the RSI forms a higher low. This suggests that, although the price is declining, the momentum is beginning to shift upward, hinting at a potential reversal to an uptrend.
Fig 1. Bullish Divergence
Author: Christian Benjamin