Bitcoin / US Dollar Perpetual Inverse Swap ContractBitMEX
Description
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The Wave Principle | Modified RSI
30 green | 70 red = Strong Movement (Possible Impulse) 20 cyan | 80 Yellow = Strongest Movement
Support and Resistance Level (Trend Continuation) Uptrend= 40 Downtrend = 60
Break+Retest = BR Div = Divergence (Change in trend)
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This indicator has been modified from original RSI to fit Wave Principle characteristics:
Uptrend Impulsive Wave over 70 RSI it changes color to red, and > 80 yellow stronger impulse | Usually means continuation, at least once more.
Downtrend Impulsive Wave under 30 RSI it changes color to green, and < 20 cyan stronger impulse | Usually means continuation, at least once more.
Once RSI reached these levels, it doesn't mean trend reversal but a correction is expected. If it shows divergence along with an Ending Diagonal, it's a confirmation for trend reversal.
In a corrective wave, levels 40-60 represents support and resistance levels where price won't go further. Indicating Corrective Waves, not as strong as Impulsives.
Prices can breakout RSI trend lines and retest from the other side before continue the new trend as also described in the Wave Principle.
Hey, i mean is it possible to add signals to the script so it can be automated?
WavePrinciple-Net
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@dpanday, oh you mean to make the indicator to auto-show when it's showing a divergence, a breakout, a retest and so on?
No my friend, that is something you need to do it manually. never trust an automated signal. also, it depends on the timeframe you are looking at.
and the support-resistance the textbook says 60 for downtrend, and 40 for uptrends. but it really depends in the instrument. Backtesting where the price bounces at rsi, is the real support/resist