1) Where is rsi standing?
= whether near 85 or 15? If they are beyond 85 or 15 and still moving, they are stretching the rubber band which is likely to rebound sooner or later!
2) How much (of this stretch) is too much?
= there are three stages of this stretch of rsi in the over"done" territory
a) both rsi and price rising
b) rsi flat, price rising
c) rsi falling, price rising
After this 3rd stage, the rubber of the catapult hits back!
Somtimes, stage c is skipped if momentum is medium!
3) Is price listening to rsi?
= When rsi retreats say 3 steps, does the price retreat 0,1,2,3 steps? Or is it that price is moving altogether in opposite direction!!
If price is retreating too less or not retreating at all, it is in no mood to hold rsi's finger and follow blindly!
Difference of opinion of two partners signals everything!
4) Are rsi and price on work or on a picnic?
= If rsi is ranging between 75 and 25, both are on a picnic, otherwise they have a task to do / train to catch / dog behind them!
A rally is serious work, ranging is picnic.
5) Are they parting ways?
= When rsi and price have an internal fight, they give sufficient signals. Look for "divergence" and "failure swing point". No journey ends till then.
6) Are they serious?
= If the overall trend is up and both rsi and price are moving down, their march is not serious! It is a buy on dip season! Vice-versa for other situation.
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