(this is a sequel to part I. to understand it in the right context pl read part I and the related discussion at http://www.mudraa.com/singlepost.php?messid=74251)
here is a reasonably dependable way to successfully identify and ignore the false price crossover of sma line
in other words, this is a good way to anticipate and foresee a whipsaw before hand:
keep rsi 14 and william%r14 charts open under the main price+sma chart
if the price cuts sma from below and gives a buy signal but
william%r is near extreme overbought boundary whereas rsi is not near any extreme
square-off short position but wait for going long
9 out of 10 times price will reverse and short position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the short position open is well-taken!
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conversely
if the price cuts sma from above and gives a sell signal but
william%r is near extreme oversold boundary whereas rsi is not near any extreme
square-off long position but wait for going short
9 out of 10 times price will reverse and long position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the long position open is well-taken!
---
even otherwise,
this is a superb way of successfully spotting reversals 9 out of 10 times
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