EASY H1 trading using divergence and candle sticks

This system does not use any indicators except for the RSI as an oscillator. The RSI is used as a divergence "leading" indicator to "predict" possible price reversal point. In additon we will also look for a candle stick reversal pattern to solidify our decision. To make things more concrete, we will also look to see these reversal levels are occuring at a logical reactionary price levels, making our odds at winning the trade that much better.

I am not sure if someone else has already covered this way of trading in another thread, but if not and there is interest out there, I can certainly post some pointers and examples.

of NZDUSD H1 chart

For short setup:
1- We look for the price to form a pinbar or bearish englufing candle stick pattern.
2- We now look at RSI(7) of the price close to see if there is divergence between it and the price. i.e the price has made a higher high but the RSI either stayed level or made a lower high.
3- Look to see that the RSI has gone above the 70 level where the first point of divergence is drawn.
4- now, zoom out a bit and look to see the level where all this is occuring. Is it around a round number, or previous support/resistance level? Is it at a fib ratio? This gives us more confidence in the trade, but it doesnot have to be present.

For Long setup:
1- We look for the price to form a hammer or bullish englufing candle stick pattern.
2- We now look at RSI(7) of the price close to see if there is divergence between it and the price. i.e the price has made a lower low but the RSI either stayed level or made a higher low.
3- Look to see that the RSI has gone below the 30 level where the first point of divergence is drawn.
4- now, zoom out a bit and look to see the level where all this is occuring. Is it around a round number, or previous support/resistance level? Is it at a fib ratio? This gives us more confidence in the trade, but it doesnot have to be present.

I will discuss entry and exit and trade management tomorrow if you guys care to read

Here is a recent setup from a few hours ago on AU H1 chart ...

before i go to bed ... Here is USDCHF

Absolutely. Very interested to read more. Thanks for sharing!

Some of you might know my other threads, I don't like to do historical setups and love to show these setups in realtime, and I would be doing the same in this thread if we continue on.

As it is getting late here (NY time zone) I am heading to bed and would carry on with these setups and more specifics of the trades, if there is interest. Please let me know.

I'm in. Definitely interested in seeing more.

Sort of reminds me of the Jankone method. He used a 6 RSI for divergence
combined with Pinbars. Also BB's and some MA's I believe...

Basic, simple trading like this pureprice is definitely another useful tool in your trading toolbox.

Cheers

Bluesteele

It's just RSI(7)

Nothing else on the chart!

Pure and simple, I'm in.

I'm especially interested in the money and trade management in this.

the system is like jankone ... definitely beneficial!
basically is what I use ... the only difference is that instead of RSI use CCI

I have found over time that the simplest, most beneficial

engulynf, pinbar and divergence (rsi or cci) ... not need anything more

just helped with the zigzag, overbought-oversold, engullynf, pinbar and differences .... nothing more

look ...

Check out those two pairs as they are setting up for a long trade

Thank you for your comments porfirio and I look forward to more

Nice to have you here bluesteele

Yep, just RSI(7), you may also use CCI instead and it would pretty much give you the same results as was commented above

Very good, welcome aboard

Appears that AU is hesitating at the 1.0500 figure and having a tough time getting above it for now, as expected