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Chapter 6. RSI BAMM > Bullish Impulsive Indicator Structures

Bullish Impulsive Indicator Structures

A bullish impulsive indicator structure reflects price action that is experiencing a quick test of the extreme oversold support area, and it can typically reverse quickly without any consolidating price action (see Figure 6.3). Since the price action commonly reverses sharply in these cases, the indicator reading rallies above the extreme limit above 30 typically within 1 or 2 price bars of the initial test.

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Figure 6.3.

Although such impulsive formations may test the extreme bullish RSI level, it is important to focus on the nature of the indicator structure and not necessarily the exact numeric reading (as long as it is below the 30 limit). The exact indicator level is important in quantifying the extreme state of RSI, but the general indicator formation is the critical factor that serves as the essential trigger to validate a potential trade opportunity.


  

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