 Okay, hi everyone. Welcome to this week's webinar. Apologies for the late start because I was having some technical issues, but we're back. So, hi. Hi everyone. Okay, so for today's session, we're going to be talking about advanced RSI and stochastic trading strategies. Before we get started, let me know in the chat if you guys can see me and hear me, as well as my slides. And yeah, we are just going to go ahead and get started. Okay, hi everyone. Very, very good evening. I'm just going to go ahead and get started. So yeah, so today's session is advanced RSI and stochastic trading strategies. Have any of you guys ever used these indicators for your trading? Feel free to let me know in the chat. This, honestly, these two indicators I use regularly. So I'm quite familiar with these and I'm sure a bunch of you guys are as well. So before we get started, as per usual, a risk warning. Trading involves risk and a disclaimer. The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in this presentation belong solely to the author and not to tick them. Okay, let's go ahead and get started. So I'm Melanie and I'll be your speaker for today. I'm an investment analyst from Everest Fortune Group, who are finalists for best effects and equity research in the years 2019 to 2021. Okay, so here is our agenda for today. We're going to briefly talk about the introduction to stochastic and then RSI. What's the difference between stochastic and RSI? And then how you can use them, how you can use divergences in your trading, the different types of divergences and combining them together for high probability setups. Is this session being recorded? Yes, it is being recorded. Okay, so let's go ahead and get started on RSI. So RSI is a popular technical analysis indicator used in trading to measure the strength of a securities price action over a specified period of time. Okay, if you, I think if you want the recording for this session, you can email, take mail. The email should be on their website. Okay, maybe I can just take a look. But yeah, if this session is being recorded. So I think if you want the recording, if you reach out to signals email, they'll be happy to send it over to you. The email should be on their website. Can you guys hear me? Okay, so Raja, I think, I think it's, yeah, maybe you can refresh your Zoom. No, we don't send signals. Yeah. Okay, yeah, just feel free to let me know if you guys have any other questions. Just let me know in the chat. Yeah, let me just get back to my slides. Okay, so we're talking about RSI, which is relative strength index, and it's used to measure the strength of a securities price action over a specified period of time. So it's commonly used to identify potential entry and exit points in the market. The RSI indicator measures the magnitude of a securities recent price changes to depend to determine whether it is overbought or oversold. So there are a bunch of different ways to use the RSI. Of course, in the next few slides, I will show you guys a technique known as divergences. But if we're just solely looking at the indicator itself and how it works, it basically oxalates between zero and 100 with values above 70 considered overbought and values below 30 considered oversold. Raja, I think the audio should be fine for everyone. So maybe you should, you can try leaving the session and then joining back again to see if that works because I think everyone else can hear me. Okay. Yeah, so when the RSI value is above 70, it suggests that the security may be overvalued and due for price correction. So it potentially indicates a sell signal. When the RSI value is below 30, suggests that the security may be undervalued and due for price rebound, potentially indicating a buy signal. So traders will often use RSI often not on its own. So it's often in combination with other technical analysis indicators and fundamental analysis as well, of course, to make informed trading decisions. Okay, so next let's look at stochastic. So the stochastic oscillator consists of two lines that fluctuate between zero and 100. Sorry, my words are cut out a little bit. But basically the first line, which is the K line represents the current closing price of the instrument in relation to the high and low prices of a given period. Then the second line is D and it's the moving average of K over a certain number of periods. So how you use it? So you basically use the stochastic oscillator to identify potential buy and sell signals. So when K crosses above D, it's considered a buy signal. And when K crosses below D, it's considered a sell signal. You can see over here. Okay, so I've indicated the formula. I've just shown the formula at the bottom right off this slide just for your reference. I think if you use MQ4 or trading view, you don't really need this formula because it's calculated for you. But yeah, it's just for your reference. Okay, so yeah, I can explain again. So for stochastic, when K crosses over D, it's considered a buy signal. And when K crosses below D, it's considered a sell signal. Okay, so the normal default settings, you can take a screenshot off this slide if you want. But basically the normal default settings is 533. So readings more than 80 indicate that the price is near its high. Readings less than 20 indicate that prices are near the lows. And the security is overbought when K moves above 80 and oversold when K moves below 20. Okay, so let's look at stochastic versus RSI. So some similarities is that they both are price momentum oscillators and they're really common as well. So while they're often used in tandem, they each have different underlying theories and methods. So the difference is that the stochastic oxidator is predicated on the assumption that closing prices should move in the same direction as the current trend. Meanwhile, the RSI tracks overbought and oversold levels by measuring the velocity of price movements. So in other words, the RSI was designed to measure the speed of price movements while stochastic oxidator formula works best in consistent trading ranges. So just in general, the RSI is more useful during trending markets. Stochastics is more so in sideways or range bound markets. Okay. So here's an example of using both the RSI and the stochastic. Okay, you can see the above 80 line is here and below 30 here for RSI. Okay, so now let's get into the strategies that we typically use for RSI and stochastic. So firstly is hidden support and resistance. So in this example here, you can see on our stochastic indicator, we have this hidden support level. Okay, but what you've realized about these areas is that for our price, it actually has made a higher high. So it's not at the same level like our stochastic. So similarly over here, you see that our price has made a higher high whereas our stochastic is just constant at this hidden resistance level. Okay, so it's always consistent. You can see that after price has rebounded off of this hidden support or other hidden resistance in this case, price then makes a rebound and starts to drop like over here. And similarly over here, once price has rebounded off of the resistance, we can expect price to similarly drop as well. Okay. So another example here, here we have a hidden support level as you can see from this green line. And then from this level or this point, this swing low, you can see we have an ascending trend line. So just to recap what makes a valid ascending trend line is if there are at least three touches on the line. So you see we have one, two and three touches here, which makes it a valid trend line. So price is moving in this ascending trend line whereas on our stochastic, it is rebounding off of this support level. So we're expecting price to continue in this ascending trend line towards our take profit here, which is what happened here. Okay. So because if we rebounded, if we go back here, right, you see price recently rebounding off of our support. So we're expecting it to continue and you can see that's what happened here. Any questions so far about hidden support and resistance? We'll look at some chart examples as well after the slides. There's no specific timeframe where RSI works best. We typically just recommend you to use, I mean, it depends on your trading strategy. We use it on either the four hour or the daily timeframe. Yeah, one hour works as well. Sure, no worries. So because Bitcoin and gold are commodities, so those tend to, I mean, you can use it. But those are more closely linked to your fundamentals. So it's important to read out on your fundamentals on both Bitcoin and gold instead of just focusing on your technicals. But yeah, you can also use this method for Bitcoin and gold just as like a supplementary to your analysis, not on its own. Yep, it's useful and intraday, but perhaps not too small of a timeframe. So anything less than one hour, we typically don't recommend. So one hour, four hours, one day. Those are the timeframes that we prefer to use. Okay, let's move on. So next we're going to look at divergences. So divergence in trading is basically a technical analysis concept that compares the movement of a securities price and an indicator such as an oscillator to identify potential trend changes. So there are two types of divergences bullish and bearish. Bullish divergence occurs when the securities price makes a lower low, while the indicator makes a higher low. So you can see in the animation. Yep, so both of these indicators are free on trading view. I will show you guys how to use them on the chart after the presentation on trading view. So if you look at the animation, let's just focus on a regular divergence first. So if we look at a bearish divergence, price is making a higher high, whereas our indicator, which is represented by the red line, it's making a lower high. So that's bearish. You're looking at the lows. So if price is making a lower low, and our indicators showing us a higher low, then that is a bullish divergence. For hidden and exaggerated divergence, the concept is kind of the same, just that the shape might be slightly different. So you can still just look at this chart, if you're unsure. So based on that, basically bearish divergence occurs when the securities price makes a higher high, while the indicator makes a lower high. So this suggests that the upward momentum of the security is losing strength and a potential downward trend may emerge. But if we look at bullish, the securities price makes a lower low, indicator makes a higher low. This suggests that the downward momentum of the security is losing strength and a potential downward trend may emerge. So maybe at this point, it's important to note that divergence is a potential early warning sign of a trend change, but it might not be a guarantee. So if normally we do this at the end of our analysis, so after going in with your Fibonacci levels and your graphical levels like your support resistance, and you think that there is going to be a trend change, you can go in with this divergence strategy to see if it supports your analysis. So it's just used in addition to trend lines and chart patterns to confirm your divergence signals, not so much to be used solely on its own. Let's look at our first example. So for this example, we can see that here we have a very slight bearish divergence. Price is making a higher high and RSI is making a lower low. So sometimes it can be very slight, so you might not be able to see it. So I'll show you guys what you can use on trading view to help you see if there is a hidden support or hidden resistance when you can't really see the difference. But basically, firstly we see price testing a key horizontal resistance level with price making a smaller high resulting in bearish divergence with our RSI. Point number two, our descending resistance line on RSI caught the past two reversals correctly. So it forecast that we could be seeing a reversal here. And that's exactly what happened. So we see price reverse strongly because of the horizontal resistance in combination with our RSI resistance from below here and also a bearish divergence between the two. Let's look at our next example. So again, we have a very small bearish divergence here. So price is making a higher high whereas our stochastic is making a lower high. Then we see the same repeated pattern over here. Price making a lower high and our rather price making a higher high and stochastic making a lower high. Firstly, we have a repeated pattern. Secondly, we have a bearish divergence. And thirdly, we have this hidden resistance level between these two swing highs on our stochastic. And you can see that after this level here, we are expecting price to drop. And that's exactly what happened here. Any questions so far? Okay, if all good, let's look at our next example. Yep, so this works on both RSI as well as stochastic. So in this example, we're looking at stochastic. I think in our previous example, we looked at RSI. But it's the same concept, same idea for both indicators. Yep, so you can see divergence in RSI and also in stochastic. Yep, for both. Can we back test on five pairs? I'm not too sure what that means. Is there any difference between the two? Yep, so there is some difference between RSI and stochastic in terms of how they are used and how they work. But in terms of divergence, the concept between the two is exactly the same. Yep, we can do this. We can try this on Euro-USD after our presentation. Okay, so sometimes both indicators might show a divergence simultaneously, but often not really. So, okay, I'll show you on trading view later. Normally, only one will show you a divergence. So that's why it's important to look at both when you're doing your analysis. Yep, so that you can compare the two. Okay, let's look at our next example here. Okay, so now we're talking about divergence potential. So this basically means that we are expecting there to be a divergence. So firstly, at the first arrow, always take note of where the bearish divergence started as this is the level where it tends to reverse to. So this yellow level here that we've highlighted is also known as a overlap level, overlap in the sense that there is a swing high and a swing low that respect the same level. Okay, so at these levels, we are always expecting price to come back down to that level and test it again. Since in the past it's already done it, we are expecting the same thing to happen again. So firstly, we have that point. Secondly, we also have a bearish divergence. Price is making a higher high. RSI is making a lower high. Okay, so you can see after this level here, we're expecting price to drop again because of the bearish divergence. And that's exactly what it did. Eventually it did drop down to this level, not immediately. Okay, but yeah, it did reverse back down to where the divergence started to occur. Okay, forecasting breakouts. So for this example, we have price as well as our RSI both moving in ascending trend lines. Okay, so over here we have our bearish divergence as well. Price is breaking out of the ascending trend line but shows a strong recent bearish divergence versus the RSI. So if you look at the RSI, price broke the trend line before price did, which forecasts that price is going to do the same thing. Okay, so it's always a combination of hints that tell you that a breakout might happen. So firstly, we have the RSI breakout over here. Secondly, we have a bearish divergence. And lastly, we have price breaking out very slightly over here. So it gives us a higher probability that price is going to continue to drop below our ascending trend line. Okay, and that's exactly what it did. Price broke and dropped very strongly out of our ascending trend line. Okay, so next example, price again is moving in this ascending or rather descending trend line. On our RSI, it's a descending trend line, but on our price, it's not a valid trend line because it doesn't have three touches, but we do see price moving in a downtrend. So on our RSI, we see price breaking or rather not price, but RSI breaking out of a descending resistance over here very slightly. So it suggests that we might see price continue to break out of it in the near future. So moving forward, we see a bullish divergence price making a lower low and RSI making a higher low. Okay, so three things. Again, price is now testing the descending resistance line. And we're wondering if it's going to break it. We have a descending trend line breakout. And we also have a bullish divergence suggesting that we could be seeing a strong reversal. Okay, and then we see a successful breakout of descending resistance line as forecasted by RSI. So a valid trend line does not have to have support and resistance. A valid trend line just has to have three touches to be considered valid. So if it's a descending trend line like over here, the three touches have to be below the line. So here we see one, two and three here, although this one isn't really a touch because it's breaking out of it. But if it reversed off of it, then it would be considered a valid trend line. If it's an ascending trend line, if you can imagine price, we would draw the trend line below price. And same thing, three touches, just that price would touch it above the trend line. I hope that makes sense, but I might show you in the live analysis part. So let's look at some GIFs. So if we look at the image, the screenshot first, we have price moving in a descending trend channel. So price moving in a descending trend channel, and I also have a swing high resistance that's in line with a 100% Fibonacci projection. Okay, so after doing that analysis, then I pull out my stochastic and I see, oh, between these two lines that I've highlighted, price is making a lower low, but our stochastic is making a higher low, which is giving us, which is a bullish divergence. Okay, so what I'm expecting after this line is for price to continue upwards towards this line. Since it's a swing high, it is also in line with a Fibonacci level. And lastly, we also have a bullish divergence. Now if you look at the GIF, you can see price tested this level many times. Okay, so it's important to have multiple signs or multiple hints that point to a significant level, like something like over here. So you can use your Fibonacci, you can use just purely graphical levels. Of course you can use your different indicators. Yeah, you can get a recording if you just email, take mail. The email should be on that website. In this case, no, I just would just go in for the buy since we have many, many things pointing that price is going to break out of it and hit towards this level here. Okay, so next let's look at another example. This example we're using two indicators, we're using our Ichimoku as well as stochastic. Okay, price is making a lower low, but our stochastic is making a higher low. So, and you see price is moving below the Ichimoku cloud, which is giving us a bearish signal. So setting price to continue moving under or rather below the cloud temporarily exists at least since it is quite a distance below the cloud. So if we look at the GIF, you can see it did move above, but only a bit later. So if you're putting your take profit, take profit levels, we would typically place it, we won't place it here. We'll probably place it way above at another swing high above this cloud. Okay, since we have this bullish divergence over here. Okay, now let me just pull out my charts. I think that was a request for you earlier on. So let's go ahead and take a look at that first. Okay, so on our your USD. I'm going to start off by looking at the higher time phase first. Okay, just to get an idea of where prices are headed towards. So on our week time frame we see prices moving in this ascending trend channel. Okay, so what makes a valid trend channel is if there are at least two touches at the top. Here we have three and at least two touches at the bottom channel. Okay, now looking at our daily timeframe. We see prices kind of ranging. Let's see if we have any trend lines first. Okay, so something like this, this is not a valid trend line because it doesn't have two, three touches. Okay, so let's go, let's start off by adding our support and resistance levels first. So for my pivot, I'm just going to place it at this swing low here. And I want to try and pull it back as far as I can without cutting too many bodies of candlesticks. So over here, this will be my pivot. So I can't pull it back any further. Okay, because I would be cutting too many candlesticks here. So it's just at this level. Okay, with this swing high and a swing low here, that's fine. Next, I'm going to place my first resistance at this swing high and my first support at this swing low here. Okay, maybe here at this overlap level as well. Okay, so this is purely graphical, purely just looking at your swing highs and swing lows. And then we go in with our Fibonacci levels to support these horizontal levels. So I'm starting off with a retracement. Okay, we can see that my 61.8 kind of lines up here. So it doesn't have to line up exactly at your horizontal levels because the point of using Fibonacci levels is to find confluence areas. So confidence areas are basically areas where more than two or more Fibonacci levels line up in the same area. Okay, because price tends to be more attracted to those areas. So something like this, as long as they are near the level that's good enough. Okay, even though this 23.6 lines up with our first resistance, we can't use it because price has already broken all of it. So I'm just going to keep my 61. Next, using another retracement. Okay, you can see my 61 also lines up with my pivot. Let's see. I think we have a projection here. Okay, you can see 61 as well lines up at the same area here. So this is a confidence, an example of a confidence area. So we have a swing, swing high and a swing low lining up so it's an overlap level. That's the first point. Second point, we have a retracement 61.8% retracement and we have a 61.8% Fibonacci projection that also line up in that area. So the expecting price to probably drop to our first support here. Okay. Okay, now let's see if I'm not too sure if we have any divergences here. Okay, not really. I guess between, if we look in the recent past, we have a bit of a divergence here. Okay, let's just look at our RSI first. Okay, so between these two levels, price is making a slightly lower high. So how do you know it's a slightly lower high? Okay, because if you zoom in, you can see this tip, this peak here is slightly above. Okay, whereas between these two, that same two levels price made a higher high. So that's a barrage divergence. And then if we replay, right, you can see price proceeded to drop off with that. So yeah, that's, that's an example of a barrage divergence. So if we now look at our stochastic, and I'm going to hide my RSI now, is there was a question earlier about whether you can use both. And I think you can. I mean, you should use both together, but they might not tell you the same things. For example, here we have so using our horizontal ray, which is this tool here, you can see whether you have a hidden, hidden resistance or hidden support. So for our stochastic, if I place it here, you can see that we have a hidden support level. But same thing between these two levels price made a higher high. So again, this is a hidden resistance, and we're expecting price to drop after that. So in this situation, yes, both gave us the same signal that price is going to drop after this, this bar here. Yeah, but it might not always be the case. And they might tell you different things. So previously on our RSI. Right, so on our RSI, we have a divergence, bearish divergence, whereas on our stochastic, we have a hidden resistance. Okay, that's, yeah, that's an example. Okay, do you guys have any other questions? There's no timeframe which it works better on we just, it really depends on your own trading strategy. But normally we recommend either using one hour, four hour or daily. Yeah, nothing less than 30 minutes. Do you wait for it to close? No. Oh, actually yes. So if you're talking about like a trendline, let me see if I can find a trendline. For example, for example over here, right, if the week is below the trendline, that's fine as well. So it doesn't really matter. As just as long as it touches, if it comes out by a little bit, that's fine as well. Yeah, let me show you my settings. So this is for stochastic and let me know. And then this is for RSI. Okay, any other questions? Sure, no worries. Okay, if there are no other questions, do you guys have any other requests, stochastic settings again? Yeah, so it works on a smaller timeframe as well. So either the each one hour or four hours, let me show you in a bit. Okay, so if we look at our four hours timeframe, is there any computation to get the pivot? Computation as in calculation? No, it's purely graphical. That other example, okay. I'm not sure if I can get it back. Okay, yes. So if we're using stop loss or take profit, this would, since we are expecting it to drop, your take profit would be your first support. Okay, but your take profit, we typically would recommend you to place it above, like over here, above any major confluence area. Okay, and your stop loss will probably be below it. So I just label support and resistance for your own reference. And your pivot would obviously probably be your entry as well. You didn't support our resistance in stochastic only or RSI as well as both. Okay, maybe I just want to briefly mention, if you are unfamiliar with Fibonacci, you can take a look at theforixarmy.com. I did go through a few examples of Fibonacci in the live charting analysis. But yeah, you can go ahead and take a look. But since someone mentioned take profit and stop loss levels, I just wanted to quickly bring this up. So if we're looking at a buy entry, so something like here, we are looking at a sell and sell entry, right, since we're going for a sell towards our first support. But if you're looking for a buy entry, you would place your stop loss below any Fibonacci confluence and your take profit will be below any major confluence areas. The reason for that, you can see over here. Okay, we would recommend you to place your stop loss beyond and your take profit before any key Fibonacci confluence area or like resistance, major resistance or support levels. Okay, reason being that more often than not price is attracted to strong areas of Fibonacci confluence. And if your stop loss is right before it, you will likely get stopped out before the market reverses. If we're talking about take profit, you should place it before a key Fibonacci confluence area because there's a high chance that price might not be able to go beyond it. And instead of reaching your profit target, it reverses and hits back to your entry. Yeah, I think I've answered all the questions. Okay, if there's no other questions, I think that's all the time we have for today. So thank you guys so much for joining me. I hope you guys found this helpful. And I will see you guys again next week. Thanks everyone. Bye. Feel free to find me on LinkedIn as well. It's just my name. And yeah. Thanks everyone. Bye. If you want the recording, you can email, take mail. I think they will send you the link to this recording. Okay, thanks everyone. See you guys. Bye.