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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Techplayer who wrote (8013)	10/18/2002 6:36:49 PM
From: bramble88	Read Replies (2) \| Respond to of 57110

RSI and some other indicators like MACD generally follow the price, but also reflect momentum to a certain extent. When the price is trending up and RSI is trending down over the same period, you have a negative divergence. Price trending down, while RSI trends up -positive divergence. For example, if the price just made a higher high, but RSI made a lower high at the same time ->negative divergence. More often than not, the RSI trend is an early indication of eventual price direction. Doesn't always work, but useful in conjunction w/other data. Also, I believe that the longer such a divergence exists, the more reliable this is as a signal. Same with MACD.