The Connection between an equity being below its lower Bollinger Band and
its RSI testing a support is something that you should have in your
trading tool box.
First, this only works if you use a 30 day RSI setting. On today's chart,
we created a CRSI which is simply a RSI indicator with the value of
50 reset to 0. Since 50 is neutral, 0 is a common sense level for a neutral
level since everything above is naturally positive, and everything below is
naturally negative ... there is no magic about this, it simply makes the indicator
real easy to read.
When you look at today's chart, the connection between the two is obvious
... When you look at the chart, notice when the NYA Index was below its
lower Bollinger Band and how the 30 CRSI was at its support line and testing
it at the same time (See the blue arrows for these testing areas).
If you are looking at the chart, by now you have become aware of the fact
that we are at that testing point once again ... the NYA Index was below
its lower Bollinger Band yesterday, and the 30 CRSI was testing its support
line, and that makes this a really important day for the markets.
Marty Chenard is an Advanced Stock Market Technical Analyst that has developed
his own proprietary analytical tools and stock market models. As a result,
he was out of the market two weeks before the 1987 Crash in the most recent
Bear Market he faxed his Members in March 2000 telling them all to SELL. He
is an advanced technical analyst and not an investment advisor, nor a securities
broker.
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