[ RSI Divergence ]
Glen,
I'm not sure if you're able to shift the scale on your indicators, like I can with SuperCharts. It allows me to better look at the finer shifts in indicator changes. However, when looking at the RSI from a more standardized scale, it is also possible to see the divergence, though admittedly a bit more difficult.
For review, an RSI Divergence occurs when you have a stock price reaching new, higher peaks, while the RSI correspondingly develops descending peaks. If you draw a trendline (descending, in this case) directly on the RSI indicator at the same time you draw the trendline (ascending) on the chart, you'll see that both will point in different directions.
...as is the case with Amazon (AMZN). It's easier to see here.
For CTXS, just draw your trendline right on the RSI from mid-October to the early December peak and on the stock chart for the same period. That final RSI peak should correspond with that Spinning-Top-like day on 12/8. On 12/10, you had another 'small-body-day' resting precariously at the breakout-support level. By now you should be able to see that the RSI did indeed develop a lower peak. And on the following day, when CTXS gapped down 1.75 points at the open, it would appear that the possibility of a Bull Trap had indeed occured.
Hope that helped.
Regards,
Rainier
PS For another example, try EQNX |
