WEBVTT

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Here we have New Zealand dollar against United States dollar on a four hour chart.

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In the second part of the chart, we can find higher highs and higher lows, so we can say that the price is

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in an up trend. Let's add the relative strength index and check if we can add more value to this analysis.

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So "insert", "indicators" and "relative strength index".

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I want to apply the oscillator to high because the price is in an uptrend. So here we have the RSI

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and I'm going to draw my vertical lines to check each high.

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The first one is here, then

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we have another one here. Going on,

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another high is on this green candle

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and the last one is here on this candle. On the RSI,

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nothing weird between the first two highs.

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The value is growing. Then on this new high,

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the RSI is at a lower level compared to the previous high.

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So we have a divergence.

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So at this point we can start to look for a candlestick pattern that gives us a good chance to enter

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a short position.

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Right here, we have a bearish engulfing pattern.

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So this is the first good chance to open a short position. Then here, right on the divergence,

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we have a shooting star that is another amazing opportunity to open a short position. Going on, we see

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that actually the price went down and our analysis with the divergence was correct.

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Maybe we had a new high here,

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I'm going to draw another vertical line.

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This new high actually forms another divergence because the RSI line is lower than the previous level,

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so it only confirms our view of the markets.

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As you may have noticed, trading with the divergences let us take the trade against the trend, trying

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to catch a new trend. This is not something that I usually suggest but I don't want to close the door

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to new opportunities.

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So my advice is: try it.

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You never know what is going to work for you if you never try.

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You have a demo account where you can try different strategies for free.

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So you have nothing to lose.

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Practice, practice, practice! And see if it's going to work for you.