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A Charting Tip To Put In Your Trading Toolbox

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.

NYSE (NYA and C-RSI 30 Chart

 

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