Use The Reverse Stochastic Divergence In Your Trading
Diamonds Trust (DIA) was pulling back from
its intraday high and testing its 60-period EMA on its 5-minute chart.
Definitely, DIA was trying to find a potential support level. The RSI was
positively diverging, but there was one more interesting element.
10:39:44
(From TradersWire)
| Action | Symbol | Order Type | Setup | Stop | Current Price |
| Buy | DIA | At the market | positive RSI divergence | 105.10 | 105.26 |
Look at the 5-minute chart of DIA below. The
price hit higher low, but the stochastic recorded lower low. When it happens,
watch out! Normally, the stochastic rises when the price moves up. But what
happened here was a Reverse Stochastic Divergence. (There is a
lesson on this subject
by Brice, Editor-in-Chief)
11:21:32
Follow up on the 10:39 story (DIA)
Sell half and lock in your profits. Move stop to breakeven.
Have a nice afternoon session!
If you have questions, feel free to mail them to me.
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