Calculation of a TP trough RSI Divergence

Viewing 15 posts - 1 through 15 (of 27 total)

1 2 →

Author

Posts
12/21/2020 at 5:28 PM #154753 quote

Zigo
Participant

Master

I note that in most cases, and speaking of more than 75%, of cases, the calculated Target price (TP) is met. The chart shows both the purchase price and the TP. A green rectangle, for upward rates and a red rectangle for downward rates, indicates the 2 candles where the divergence ends. The TP (line) is printed in the graph, green for upward calculation and orange for downward calculation.

Depending on the timeframe, purchased (OB) and sold (OS) are adjusted. The period for the RSI is usually 11 and not 14. The variables are for period (n) for overbought (OB) and for over sold (OS). If someone feels called to test these kinds of parameters in a backtest. In that case, I would kindly like to know the results.

PXI-322-ticksDiv.png

12/21/2020 at 5:35 PM #154755 quote

Zigo
Participant

Master

See attachment for the opposite direction.
PXI-144-secondenDiv.png

12/21/2020 at 5:53 PM #154757 quote
Zigo
Participant

Master
The coding for RSI TP is based on a lookback period of 29 (see line 53 and 73), if you change this value, for example to the first top (bottom) the calculation becomes different so as the results. Maybe if backtest there would be a variable number instead of 29 it could be optimised. Here is the coding:
```
// --- settings
//Zigo 21/12/2020
RSIp=n //RSI period
once obLevel=ob //overbought level
once osLevel=os //oversold level
minimalBars=5 //minimal count of bars where RSI is ob or os
// --- end of settings
 


irsi = rsi[RSIp]
ob = irsi>obLevel
os = irsi<osLevel
 
if ob then
if not ob[1] then
maxrsi = 0
maxprice = 0
firstobbar = barindex

endif
maxrsi=max(maxrsi,irsi)
maxprice=max(maxprice,high)
if maxrsi<>maxrsi[1] then
maxrsibar=barindex
endif
endif
 
if os then
if not os[1] then
minrsi = 100
minprice = close*100
firstosbar = barindex
endif
minrsi=min(minrsi,irsi)
minprice=min(minprice,low)
if minrsi<>minrsi[1] then
minrsibar=barindex
endif
endif
 
Once divsell=0

if irsi crosses under obLevel then
//verif divergence
div = maxprice>oldmaxprice and maxrsi<oldmaxrsi and (barindex-firstobbar)>=minimalBars
if div then
s=(High[0]+low[0])/2
drawsegment(oldmaxrsibar,oldmaxRSI,maxrsibar,maxRSI) coloured(255,255,0, 255)
DRAWRECTANGLE(barindex, low-AverageTrueRange[14](close), barindex[1], low[1]-3*AverageTrueRange[14](close))coloured(255,55,25,255)
DRAWTEXT("Start Div RSI Down", barindex, High+2.5*AverageTrueRange[14](close),dialog, standard, 15)coloured(205,170,120,255)
DRAWTEXT("Enter Short = #s#", barindex, High+ 1.5*AverageTrueRange[14](close),dialog, standard, 15)coloured(205,170,120,255)
TPSh= (Lowest[29](low)+ (maxprice-oldmaxprice))
DRAWHLINE(TPsh)coloured(255,0,0,35)
DRAWTEXT("TargetLine = #TPSh#", barindex, TPSh-0.5*AverageTrueRange[14](close),dialog, standard, 12)coloured(205,205,0)
divsell=s
endif
oldmaxrsi = maxrsi
oldmaxprice = maxprice
oldmaxrsibar = maxrsibar
endif
Once divbuy=0

if irsi crosses over osLevel then
//verif divergence
div = minprice<oldminprice and minrsi>oldminrsi and (barindex-firstosbar)>=minimalBars
if div then
b=(open)
drawsegment(oldminrsibar,oldminrsi,minrsibar,minrsi) coloured(0,200,0)
DRAWRECTANGLE(barindex, High+AverageTrueRange[14](close), barindex[1], high[1]+4*AverageTrueRange[14](close))coloured(0,125,175,255)
DRAWTEXT("Start Div RSI Up", barindex, Low-2*AverageTrueRange[14](close), dialog, standard,15)coloured(125,255,125,255)
DRAWTEXT("Enter Long <= #b#", barindex, low-1.5*AverageTrueRange[14](close),dialog, standard, 15)coloured(0,255,0,255)
TPL=(Highest[29](High)- (minprice - oldminprice))
DRAWHLINE(TPL)coloured(0,255,0,35)
DRAWTEXT("TargetLine = #TPL#", barindex, TPL+0.5*AverageTrueRange[14](close),dialog, standard, 12)coloured(0,255,0,255)
divbuy=b
endif
oldminrsi = minrsi
oldminprice = minprice
oldminrsibar = minrsibar

endif
 
return
```
Al and Monobrow thanked this post
12/21/2020 at 6:05 PM #154758 quote

Zigo
Participant

Master

Dare to use other timeframes then classical timeframes. See the difference between 30 min and 29 min.
PXI-30-minuten.png PXI-29-minuten.png

12/21/2020 at 6:09 PM #154761 quote

Zigo
Participant

Master

The indicator can also in a separate frame.
PLermite thanked this post

PXI-29-minutenInd.png

12/23/2020 at 12:23 PM #154973 quote

Zigo
Participant

Master

Update for the targetline. (PXI 29min.)
PXI-29-minuten.Updatepng.png

12/23/2020 at 1:03 PM #154982 quote

Zigo
Participant

Master

If the Target Line is more then a few pips the TP will not reached at ones.
PXI-29-minutenT.png

12/25/2020 at 3:00 PM #155192 quote

Zigo
Participant

Master

At stagnant rates it is sometimes easier to make determinations. Today I looked at the Dow Jones on day chart and established a double “negative divergence” for the RSI (14), albeit with the OB and OS settings 60, 40.

It is nice that the SMI (14,3,5) with OB and OS settings of 40 and -40 respectively shows a similar “negative divergence”. The CCI(18) with the OB and OS settings of 100, -100 closes, also the row with a “negative divergence”.

The future will show whether these divergences will have an impact on the rates.

12/25/2020 at 3:03 PM #155193 quote

Zigo
Participant

Master

Sorry, I forgot the attachment.
DOW-DagDiv.png

01/05/2021 at 9:15 PM #156520 quote

Zigo
Participant

Master

Double Divergence on Dax today. Manual calculation: First TP shortest dotted lines at TP =13665.5-(13754-13730.5)=13742 (inner divergence) Second TP overlapping divergence at TP=13617-(13769.5-13719.5)=13567 (outer divergence)
DAX-521-ticksDDiv.png

01/06/2021 at 10:07 AM #156560 quote

Monobrow
Participant

Senior

Thanks Zigo, ive been wondering how to calculate a TP from an indicator for a while as im just using fixed values at the moment. is the general consensus that RSI is the “best” way to do TPs? Have you tried others? Also for Stops I was playing with the idea of using ichimoku cloud breakouts/breakthrus, but couldnt get it to work, have you worked on any indicator based stop ideas? thanks again. Awesome code.

01/06/2021 at 10:20 PM #156677 quote

Zigo
Participant

Master

@monobrow Indeed RSI is the best indicator to calculate a TP. Thanks for your reply.
Monobrow thanked this post

01/07/2021 at 8:41 AM #156693 quote

Zigo
Participant

Master

TP calculated on the CCI indicator
DAX-843-ticksDiv.png

01/07/2021 at 8:55 AM #156700 quote

Zigo
Participant

Master

Calculated by RSI
DAX-521-ticks8u53.png

01/07/2021 at 9:37 AM #156716 quote

Zigo
Participant

Master

Almost reached.
DAX-521-ticks9u35.png
Author

Posts