stochastics & rsi

[TREX]

I had a question about the stochastics & rsi, i am studying the school of pipsology (very helpfull) and my question is when i pull up a chart in this case hte usd/yen on a 4 hour chart and apply the stochastics (slow) i see that it indicates it is oversold as it reads over 80 and according to my studies anthing over 70 indicates over bought but when i apply the rsi tool it reads just below 70 and according to my studies anything over 80 indicates overbought.Am i wrong in assuming that they should both verify that it is over bought or am i doing something wrong? Thank you for any help you can provide.

[profitforextrader]

The markets are overbought/oversold when traders decide it is not when rsi or stochs cross 70 on your chart, there will be many occasions where indicators be screaming overbought yet market continues to
soar in current direction. instead i'd recomend you study and focus on candlestick patterns to determine when markets are overbought or oversold

Lee

[Blaiserboy]

Originally Posted by profitforextrader

The markets are overbought/oversold when traders decide it is not when rsi or stochs cross 70 on your chart, there will be many occasions where indicators be screaming overbought yet market continues to
soar in current direction. instead i'd recomend you study and focus on candlestick patterns to determine when markets are overbought or oversold

Lee

Overbought/oversold........ those words are meaningless and useless regarding indicators......... this is where indicators lie and tell fibs......

Learn two or three pairs of Candle reversal patterns and you will not have to rely on an oscillator that can lead you down a bad path......

[profitforextrader]

Agreed

My personal favourites being inside bars and long wick candles

Lee

[Andrewunknown]

Stochastic oscillators (in this case slow) clock "overbought" above 80 and "oversold" below 20. RSI clocks "overbought" above 70, and "oversold" below 30. You'll find this description in virtually any resource reviewing these indicators.

That said, the indicators aren't lying, per se. But these descriptions don't always logically align with how price behaves. A strongly trending market can hover over the oversold/overbought line for the some time, moving across a significant range while the Stochastics or RSI needle remains buried.

These aren't bad indicators, or useless because of their unpredictability - they were developed not so long ago and are universally known for a reason, even if they are highly fallible as entry/exit systems in their own right. To use them effectively (or know if you want to use them at all) your understanding of them should pass beyond the basic description of how they produce signals (above) to include forms of divergence, etc.

Candlestick patterns, etc. are highly valuable, but don't be dissuaded from pursuing education on these indicators. You'll see them referred to very often during your trading career, so a good grasp of them can only help you, and you may find an application of them that works for you as you trade.

[profitforextrader]

Originally Posted by Andrewunknown

Stochastic oscillators (in this case slow) clock "overbought" above 80 and "oversold" below 20. RSI clocks "overbought" above 70, and "oversold" below 30. You'll find this description in virtually any resource reviewing these indicators.

That said, the indicators aren't lying, per se. But these descriptions don't always logically align with how price behaves. A strongly trending market can hover over the oversold/overbought line for the some time, moving across a significant range while the Stochastics or RSI needle remains buried.

These aren't bad indicators, or useless because of their unpredictability - they were developed not so long ago and are universally known for a reason, even if they are highly fallible as entry/exit systems in their own right. To use them effectively (or know if you want to use them at all) your understanding of them should pass beyond the basic description of how they produce signals (above) to include forms of divergence, etc.

Candlestick patterns, etc. are highly valuable, but don't be dissuaded from pursuing education on these indicators. You'll see them referred to very often during your trading career, so a good grasp of them can only help you, and you may find an application of them that works for you as you trade.

i agree

although i am far from a fan of indicators and i dont use or plan on using any on my charts it is still very beneficial to educate yourselves on their uses and how they produce their signals although i wouldnt recomend spending too long on them ie trying to understand the complex algothrims and mathematics behind them just try and grasp the basic concept in order to expand your knowledge of the market which even if not used will still indirectly benefit your trading as it will give you more confidence, saving you from fear and impatience

lee

[TREX]

Originally Posted by Blaiserboy

Overbought/oversold........ those words are meaningless and useless regarding indicators......... this is where indicators lie and tell fibs......

Learn two or three pairs of Candle reversal patterns and you will not have to rely on an oscillator that can lead you down a bad path......

i am very gratefull for everyonesw input, one question i have is when you learn the candle stick reversal patters do you use or is it helpfull to use the oscillators such as rsi & stochastics for confirmation of the reversal?

[profitforextrader]

Originally Posted by TREX

i am very gratefull for everyonesw input, one question i have is when you learn the candle stick reversal patters do you use or is it helpfull to use the oscillators such as rsi & stochastics for confirmation of the reversal?

No not at all, most people who are proficient in candles and price action analysis use NO indicators at all

Forex is a lot like that ancient chineese proverb

" give a man a fish (indicators) and he will eat for a day, teach him how to fish (read price action and candles) and he will eat forever" or something like that lol

See my point?

Lee

[Blaiserboy]

Originally Posted by profitforextrader

No not at all, most people who are proficient in candles and price action analysis use NO indicators at all

Forex is a lot like that ancient chineese proverb

" give a man a fish (indicators) and he will eat for a day, teach him how to fish (read price action and candles) and he will eat forever" or something like that lol

See my point?

Lee

I see your point... loud and clear in 3 D

I watch the posts in technical templates........ long time frames...... clean charts.... successful trades......

I watch in some rooms people trading with price bars only.. and cleaning up.......

ie, their minds are not confused by info on the chart....... they see S&R and make decisions.....


Unfortunately I have not developed the skill to where I can operate with a clean chart............ but I aim to be in that group one day soon.

[profitforextrader]

Originally Posted by Blaiserboy

I see your point... loud and clear in 3 D

I watch the posts in technical templates........ long time frames...... clean charts.... successful trades......

I watch in some rooms people trading with price bars only.. and cleaning up.......

ie, their minds are not confused by info on the chart....... they see S&R and make decisions.....


Unfortunately I have not developed the skill to where I can operate with a clean chart............ but I aim to be in that group one day soon.

Be BOLD be BRAVE!

Just clear your charts and give your eyes time to adapt and you WILL SEE IT!

Draw nothing but horizontals!

Go blaiser you can do it

Lee