hctv presents seconds from disaster monda, page-12

Red, interesting link re RSI; IMO the use of indicators to determine Overbought and Oversold status is one of the most misunderstood areas of TA. I gave some details of my thoughts on RSI in Post: 7654942 found here:

GJ RSI post

Lets look at Investopedia “Definition of 'Overbought':

1. A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.

2. In technical analysis, this term describes a situation in which the price of a security has risen to such a degree - usually on high volume - that an oscillator has reached its upper bound. This is generally interpreted as a sign that the price of the asset is becoming overvalued and may experience a pullback.
(Read more: http://www.investopedia.com/terms/o/overbought.asp#ixzz1oqfvYwKg

IMO an Overbought signal such as RSI > 70 Is NOT of itself an indication that a SELL is triggered (& vice a versa Oversold) & therefore the analysis that your related article presented was “doomed to failure”. Any trigger to buy or sell must be much more sophisticated than that & probs be combined with price confirmation. As “the gurus” always tell me “price is king”.

Since the post referenced above I have been watching the RSI14 on all my daily charts and worth noting that the major world indices I watch (ex XJO) have been Overbought through all of 2012 until last weeks little sell off! It then fell below my referenced 60 line and I will be looking for shorts if the recovery fails to reclaim the 60 line this week.

Always like a bit of discussion on TA; should be more of it on this forum IMO.

PS: Been a few Chart heretics on the forum recently; I have explained before that the only reason I am posting here or have any interest in TA is that after 20 years of (fairly successful) INVESTING based on FA & getting “GFCed” in 2008 I realised there was NOT ONE FA analyst in the world that picked the GFC. Many TA peops who I had scoffed at did!
Cheers g