As many of you know, I use the Stoch RSI as my main cycle indicator. As an indicator of an indicator, it normalizes the RSI indicator itself and provides excellent guidance on the price cycles of Gold. And while I base my daily analysis on the Daily time frame, I use 2 shorter time frames to enter my positions. These time frames are 30 minutes and 60 minutes.
Let me give you a real life example from yesterday of how I added to an existing short position.
Last week ended with a beautiful down candle on the daily chart. Long upper wick and a full body that closed just a few points above the bottom of our wedge. With plenty of room left on the Stoch RSI before it crossed the 20 line, I wanted to add another position to my existing short. But I new that I didn't want to jump in at Friday's closing price. So how could I gauge any potential pullback and set an entry price?
The first thing I did was to look at the 30 and 60 min charts, specifically to find where price was on those charts in relation to the overall down cycle.
Here is the 30 min chart on Sunday night at 11 pm PST. It's clear from the Stoch RSI that price was at the bottom of it's cycle. Not an ideal time to enter a trade. And the same was true on the 60 min chart (bottom chart). Therefore, I wanted the Stoch RSI to cycle up to get the best possible entry price. Looking at the BB, I placed a limit order at the inner BB (1.0 Std. Dev) @ 1321, thinking that would give both Stoch RSIs enough time to complete an up cycle. Turns out that was pretty close to the high of the day!
I have had the best entries when I wait for the cycle indicators across multiple time frames to get in sync. Waiting for harmony across multiple time frames is a great way to create a repeatable system for entries and really helps to remove emotions from your trading.
I would love to hear if this technique is helpful!
So is this week good time to buy if it is breaching 1313 ?
GoldBands
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Great question! I usually wait for the green Stoch RSI line to turn back up and cross back above the 20 line.
Before today's price action, I would have said that 1313 sounded like a reasonable entry if confirmed by the Stoch RSI. However, after today's price action, I would be very careful as a buyer. Remember, Stoch RSI is not binary. What I mean by that is that the indicator can stay in oversold or overbought territory for a long time. If you're looking for an entry, you may need to look at the 30 and 60 minute time frames and wait for them to be aligned before entering a trade.