![]() ![]() The combination of the two can be used to suggest when to prefer a directional bias, and subsequently shift in anticipation of a trend reversal. The RSI indicates when the trend is losing momentum. The EMAs indicate when trend shifts (bullish or bearish). This can give an indication that the trend is losing strength. Whilst this script does not highlight divergences, what it does highlight is when the shorter term RSI (K) crosses over D (the average of last 3 periods). price is creating higher highs, and stoch RSI is creating lower highs) it suggests the strength of the trend is weakening. If there is a divergence between the price (e.g. These conditions suggests that momentum is very strong in the direction of the trend. RSI measures Relative Strength (RSI = Relative Strength Index). Stochastic RSI is a separate indicator that has been added to this script. The default settings are based on “Trader XO’s” settings who is an exceptional swing trader. The settings for the EMAs can be changed based on user inputs, and by default the candles are coloured based on the crosses to make it more visual. This is not a perfect system for trade entry or exit, but it does give a good indication of market trends. shorter EMA crosses under longer term EMA). previous lows) or simply waiting for an EMA cross in the opposite direction (i.e. Invalidation on long setups is usually found via price action (e.g. This can be an indication to either go long on said asset, or that it is more preferable to take long setups over short setups. When the shorter EMA (calculated off more recent price action) crosses, or is above, the slower moving EMA (calculated off a longer period of price action), it suggests that the market is in an uptrend. EMAsĮMAs are typically used to give a view of bullish / bearish momentum. This script has two main functions focusing on EMAs (Exponential Moving Average) and Stochastic RSI.
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