Indicators-Economic Data, Don't Knock IT Until You Have Tried It
When looking at the Industrial production Index (one of the best forecasters of future recessions) you noticed every top over 50 years, has been marked by a significant angle divergent. @nmike a long time ago introduced me to RSI (50) and how to properly use the indicator. He just recently revisited this topic and I started looking through economic data. What I found was exception results.
To use RSI (50) to scan charts for divergences or support you often compare RSI to price. When you see price (in the case economic data) going up and RSI going down, that is what we call divergence. When you have Price up and RSI down, that usually calls for a top and future pullback. Using RSI with Industrial Production we can call a recession before a recession is underway. Being able to see a large divergence between Economic Data and RSI, we can also assume a major market correction is under way.
To use RSI (50) to scan charts for divergences or support you often compare RSI to price. When you see price (in the case economic data) going up and RSI going down, that is what we call divergence. When you have Price up and RSI down, that usually calls for a top and future pullback. Using RSI with Industrial Production we can call a recession before a recession is underway. Being able to see a large divergence between Economic Data and RSI, we can also assume a major market correction is under way.