Summary: Divergences
Another way is to make use of
momentum tricks by watching out for an actual crossover or waiting for the
oscillator to move out of the overbought/oversold region. You can also try
drawing trend lines on the oscillator too.
With these nifty tricks, you can
guard yourself against false signals and filter out those that’ll be very
profitable.
On the flip side, it is just as
dangerous trade against this indicator.
If you’re unsure about which
direction to trade, chill out on the sidelines.
Remember that taking no position
is a trading decision in itself and it’s better to hold on to your hard-earned
cash than bleed Benjamins on a shaky trade idea.
