Turning Patterns into Profits with Harmonic Trading (Collection) > Chapter 6. RSI BAMM > Step 1: Initial RSI Test of Extreme Bearish Limit - Pg. : Safari Books Online

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Turning Patterns into Profits with Harmonic Trading (Collection)

Turning Patterns into Profits with Harmonic Trading (Collection)

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Contents

Table of Contents

Harmonic Trading, Volume One: Profiting from the Natural Order of the Financial Markets

Harmonic Trading, Volume Two: Advanced Strategies for Profiting from the Natural Order of the Financial Markets

Dedication Page

Acknowledgments

About the Author

Chapter 1. Contemporary Market Case Studies from a Harmonic Trading Perspective

Chapter 2. Harmonic Impulse Waves

Chapter 3. New Harmonic Patterns

Chapter 4. Harmonic Patterns Relative to the Trend

Chapter 5. BAMM Theory

Chapter 6. RSI BAMM

Technical Indicators

Relative Strength Index (RSI)

RSI + BAMM = RSI BAMM

A Unique Technical Situation

Bullish RSI BAMM

Chevron-Texaco (CVX): Daily Bullish RSI BAMM

Step 1: Initial RSI Test of Extreme Bullish Limit

Step 2: Complete a Bullish W-Type Complex RSI Structure

Two Types of Bullish Indicator Structures

Bullish Impulsive Indicator Structures

Chevron-Texaco (CVX): Daily Bullish Impulse Indicator Structure

Bullish Complex Indicator Structure

Chevron-Texaco (CVX): Daily Bullish Complex Indicator Structure

Step 3: Define the RSI Trigger Bar

Chevron-Texaco (CVX): Daily RSI BAMM Trigger Bar

Step 4: Reaction of RSI and Price

Chevron-Texaco (CVX): Daily Reaction of RSI and Price

Specific Type of RSI Retest

Chevron-Texaco (CVX): Daily RSI BAMM Trigger Bar

Step 5: The Final Phase—Divergence of RSI Versus Price

Chevron-Texaco (CVX): Daily Divergence of RSI Versus Price

Chevron-Texaco (CVX): Daily Bearish RSI BAMM Confirmation Bar

Step 6: Bullish RSI BAMM Confirmation Point: 1.13 Versus 1.618

1.13 Extension at Bullish RSI BAMM Confirmation Point

Chevron-Texaco (CVX): Daily Bullish RSI BAMM Trigger Bar

Step 7: Trade Execution at the Bullish Pattern Completion and the Bullish RSI BAMM Confirmation Point

Pattern Completion in 1.13–1.618 RSI BAMM Area

Bullish Butterfly at 1.13 RSI BAMM Confirmation Point

Chevron-Texaco (CVX): Daily Bullish Butterfly at Bullish RSI BAMM Confirmation Point

Chevron-Texaco (CVX): Daily Bullish Butterfly

Chevron-Texaco (CVX): Daily Bullish Butterfly Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

Intermediate RSI BAMM Trigger Bar Signals 1.13 Extension

Standard and Poor’s June 2009 Mini-Contract (ES_M9): 5-Minute Alternate Bullish Bat with Bullish RSI BAMM

Standard and Poor’s June 2009 Mini-Contract (ES_M9): 5-Minute Alternate Bullish Bat with Bullish RSI BAMM

Pattern Completion Before 1.13 RSI BAMM Extension: Bullish Bat

Philadelphia Semiconductor Index ($SOX): Bullish Bat

Philadelphia Semiconductor Index ($SOX): 5-Minute Bullish Bat Potential Reversal Zone at RSI BAMM Confirmation Point

Pattern Completion Before 1.13–1.618 RSI BAMM Area: Bullish Gartley

IBM (IBM): Weekly Bullish Gartley at RSI BAMM Confirmation Point

IBM (IBM): Weekly Bullish Gartley Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

Bullish 5-0 Pattern Completion at RSI BAMM Confirmation Point

British Pound (GBP_A0-FX): 5-Minute Bullish 5-0 at RSI BAMM Confirmation Point

British Pound (GBP_A0-FX): 5-Minute Bullish 5-0 Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

1.618 Extension at RSI BAMM Confirmation Point

Extreme RSI BAMM Trigger Bar Signals a 1.618 Extension: Bullish Crab

Coca-Cola (KO): Daily Bullish Crab at RSI BAMM Completion Point

Coca-Cola (KO): Daily Bullish Crab Potential Reversal Zone (PRZ) at RSI BAMM Completion Point

Deep Bullish Crab at RSI BAMM Completion Point

Japanese Yen (JPY_A0-FX): 60-Minute Deep Bullish Crab at RSI BAMM Confirmation Point

Japanese Yen (JPY_A0-FX): 60-Minute Deep Bullish Crab Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

RSI BAMM Confirmation Point—Reversal Acceleration Trigger

Bullish Confirmation Point—Reversal Acceleration Trigger

IBM (IBM): Weekly Bullish Gartley Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point with Acceleration Trigger

Bullish RSI BAMM Violations and Stop Loss Considerations

Standard & Poor’s 500 March 2010 Mini-Contract (ES_H0): 15-Minute Bullish Crab and Bullish RSI BAMM Failure

Standard & Poor’s 500 March 2010 Mini-Contract (ES_H0): 15-Minute Bullish Crab and Bullish RSI BAMM Failure

Bearish RSI BAMM

British Pound/USD (GBP_A0-FX): Weekly Bearish RSI BAMM

Step 1: Initial RSI Test of Extreme Bearish Limit

Step 2: Complete a Bearish M-Type Complex RSI Structure

Two Types of Bearish Indicator Structures

Bearish Impulsive Indicator Structures

British Pound/USD (GBP_A0-FX): Weekly Bearish Impulse Indicator Structure

Bearish Complex Indicator Structure

British Pound/USD (GBP_A0-FX): Weekly Bearish Complex Indicator Structure

Step 3: Define the RSI Trigger Bar

British Pound/USD (GBP_A0-FX): Weekly Bearish RSI BAMM Trigger Bar

Step 4: Reaction of RSI and Price

British Pound/USD (GBP_A0-FX): Weekly Reaction of RSI and Price

Specific Type of Retest

British Pound/USD (GBP_A0-FX): Weekly Specific Type of Retest: RSI Mid-Point (50 Limit) Requirement

Step 5: The Final Phase—Divergence of RSI Versus Price

British Pound/USD (GBP_A0-FX): Weekly Final Divergence Phase of RSI Versus Price

Bearish RSI BAMM Confirmation Bar

British Pound/USD (GBP_A0-FX): Weekly Bearish RSI BAMM Confirmation Bar

Review of RSI and Price

British Pound/USD (GBP_A0-FX): Weekly Reaction of RSI and Price

Step 6: Bearish RSI BAMM Confirmation Point: 1.13 Versus 1.618

1.13 Extension at RSI BAMM Confirmation Point

British Pound/USD (GBP_A0-FX): Weekly 1.13 Extension at RSI BAMM Confirmation Point

Step 7: Pattern Completion at the RSI BAMM Confirmation Point

Pattern Completion at the 1.13–1.618 RSI BAMM Extension Area

Bearish Butterfly at 1.13 RSI BAMM Confirmation Point

British Pound/USD (GBP_A0-FX): Weekly Bearish Butterfly at 1.13 RSI BAMM Confirmation Point

British Pound/USD (GBP_A0-FX): Weekly Bearish Butterfly Potential Reversal Zone (PRZ) at 1.13 RSI BAMM Confirmation Point

Alternate Bearish Bat at 1.13 RSI BAMM Confirmation Point

Standard and Poor’s 500 ETF (SPY): 5-Minute Alternate Bearish Bat at RSI BAMM Confirmation Point

Standard and Poor’s 500 ETF (SPY): 5-Minute Alternate Bearish Bat Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

Pattern Completion Before 1.13–1.618 RSI BAMM Extension at Confirmation Point: Bearish Bat

Standard and Poor’s 500 March 2010 Mini-Contract (ES_H0): 15-Minute Bearish Bat at RSI BAMM Extension

Standard and Poor’s 500 March 2010 Mini-Contract (ES_H0): 15-Minute Bearish Bat Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

Pattern Completion Before 1.13–1.618 RSI BAMM Extension at Confirmation Point: Bearish Gartley

Eurodollar (EUR_A0-FX): 5-Minute Bearish Gartley at RSI BAMM Extension

Eurodollar (EUR_A0-FX): 5-Minute Bearish Gartley Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point

Pattern Completion Before 1.13–1.618 RSI BAMM Extension at Confirmation Area: Bearish 5-0 Pattern

Google (GOOG): 15-Minute Pattern Completion Before 1.13–1.618 RSI BAMM Extension at Confirmation Area: Bearish 5-0 Pattern

1.618 Extension at RSI BAMM Confirmation Point

Bearish Crab at 1.618 RSI BAMM Confirmation Point

Family Dollar (FDO): Daily Bearish Crab with Bearish RSI BAMM

Deep Bearish Crab at 1.618 RSI BAMM Confirmation Point

Boeing (BA): Daily Deep Bearish Crab with Bearish RSI BAMM

Boeing (BA): Daily Deep Bearish Crab Potential Reversal Zone (PRZ) at 1.618 RSI BAMM Confirmation Point

RSI BAMM Confirmation Point—Reversal Acceleration Trigger

Bearish Confirmation Point—Reversal Acceleration Trigger

Google (GOOG): 5-Minute Bearish 5-0 Pattern Potential Reversal Zone (PRZ) at RSI BAMM Confirmation Point with Acceleration Trigger

Bearish RSI BAMM Failure—Stop Loss Considerations

Intercontinental Exchange (ICE): 5-Minute Bearish Alternate Bat and RSI BAMM Failure

Intercontinental Exchange (ICE): 5-Minute Bearish Alternate Bat and Bearish RSI BAMM Failure

Intercontinental Exchange (ICE): 60-Minute Bearish Alternate Bat Potential Reversal Zone (PRZ) and Bearish RSI BAMM Failure

Final RSI BAMM Review

Investing with Volume Analysis: Identify, Follow, and Profit from Trends

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Help

Step 1: Initial RSI Test of Extreme Bearish Limit

In the Bearish RSI BAMM scenario, the first step is to identify price action that possesses an RSI reading in the extreme zone above 70. As I mentioned previously, the 70 level for the overbought limit, as well as the 30 level to define the oversold area, were first outlined by Welles Wilder in his book New Concepts and Trading Systems. In addition, a 14-period average is calculated from his approach.

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