hey guys welcome back to another episode in this video we will be going through
our rsi indicator trading strategy in depth and how we use it in
combination with price action we also want to take the time to thank
you all for your continued support and helping us get our youtube award
so let's start the road to 1 million if you want more videos more often
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so two very important points before we start first
indicators are not magic and we never use indicators
on their own for trade entries we use indicators to support
what we have already established with price action
and second everything we discuss in this video can be used for currency trading
stock trading and crypto because price action stays relatively consistent
across different assets so we're going to go very in-depth in this
video so here's a quick breakdown of what we
will be covering
first we'll go through all the core concepts to get everyone on the same
page then we're going to go through the
strategies section and finally we will show you how we used
all these concepts to take trade entries on tesla and apple
during the big market pullback so strap in as we have a lot to cover today
so let's get into it so what is the rsi indicator rsi stands for
relative strength index and it's an indicator
that you apply to your charts that is often used for
identifying bought or oversold markets so let's
apply the rsi to our charts at the top here click
indicators type in r and it'll show up right here
click relative strength index and then it will be applied to your charts along
the bottom now this line here is 70 on the rsi and
this line here is 30 on the rsi everything at or above
the 70 line is what we call the overbought region
everything at or below the 30 line is what we call
the oversold region so in relative terms when the rsi
line touches the 30 just like it is right here it indicates
that the price of the asset you are looking at
is cheap when the rsi line touches the 70
just like it is right here it indicates that the price of the asset you are
looking at is expensive again this is in relative
terms so how is the rsi indicator
traditionally used
now this is what most traders do when the rsi enters
oversold they'll start buying and entering long positions
expecting price to go up when the rsi enters overbought
they'll start selling and entering short positions expecting price to go down
now here's the problem with using the rsi indicator
like this notice how at this level here on price
the rsi has already entered oversold so if you started to buy and enter long
positions price would have continued to go against
you for quite some time before it finally reversed what this
means is in heavily trending markets the rsi
indicator can stay inside of the overbought or
oversold region for a long long time and if you keep
taking trades solely based on the rsi indicator
expecting price to reverse you will most likely rack up a
significant amount of losses so this then leads us to a question we
often get asked which is how do we use the rsi indicator
where it actually helps our overall analysis
also right now comment below and tell us what video topics you want us to cover
as we always look at the comments to decide what to create next
now we use the rsi indicator in one way and one way only which is
combining rsi with divergences or rsi divergence
so what is divergence divergence occurs when price is moving in the opposite
direction of the rsi indicator which can then be used as an early
indication of a possible keyword possible trend
change so in this uptrend here price made a
higher high but on the rsi it made a lower high
which created a divergence and resulted in a
reversal of price again to the left price made a higher
high whereas the rsi made a lower high which
created a divergence and resulted in a reversal of price so
going in the opposite direction in this downtrend price made a lower low
whereas the rsi made a higher low which created a divergence
and resulted in a reversal of price now divergence can be used in many other
indicators as well one of which is macd which is popular
amongst many traders so this then leads us to
another question we often get asked which is why do we prefer to use the rsi
indicator over macd don't forget to comment your questions below
now the reason is simple and it's because the rsi indicator
gives us a more precise and clear divergence formation
which results in higher quality trade entries
here is the exact same chart on both sides
on the left and below is the macd indicator applied
on the right and below is the rsi indicator applied
notice how on the rsi here it gives us a very crisp
and crystal clear divergence formation but now if you look at the macd
there isn't a divergence signal at all and this is an issue we often experience
with the macd which is a lack of or low quality
divergence signals now let me be clear there is no
right or wrong choice both work perfectly fine
we just prefer the rsi because it works best with our
overall strategy and macd might work best with your
overall strategy neither is better than the other because above all
indicators are not magic and we do not use them
on their own for trade entries we use them to support
what we have already established with price action
now that being said if you know how to use divergences correctly
it is one of the most powerful tools for spotting and confirming
high quality reversal trades and you'll soon find out why
so let's cover the types of divergences we look for
now there are many kinds of divergences people use
but here are the main two types that we look for as part of our
rsi strategy first is wide divergence and second is tight
divergence and under each type there are two subtypes
subtype 1 is when the divergence occurs at or inside of the overbought or
oversold region and subtype 2 is when the
divergence occurs close to the overbought or
oversold region but does not touch so let's go to the first type which is
wide divergence why divergence is exactly what the name
states it is it is divergence where its swings are very wide and very
obvious to spot on the charts here is an uptrend
we had our divergence which then triggered a reversal
notice how wide these swings are hence the name
y divergence same thing in a downtrend we had our divergence which then
triggered a reversal and again notice the clear wide swings
and wide divergence so how do wide swings relate to price action
why divergence is also what we call high quality divergence
because we like to see wide swings and price moving sideways
before looking for any kind of reversal trade because it tells us
that the side in control of the dominant trend before the reversal
is no longer in complete control hence causing
the wide swings in both directions
now again there are the two subtypes of y divergence
which is one when the divergence occurs at or inside of the overbought or
oversold region notice how it's clearly occurring in the
oversold region or two when the divergence occurs
close to the overbought or oversold region
notice how it's close but not touching so moving on to the second type of
divergence which is tight divergence
which is exactly that it's divergence where the swings are
tight or very close together here's your downtrend we had our
divergence before the reversal occurred but notice
how the swings are very tight hence the name tight divergence now in
this example of type divergence you can still see the swings of price
but sometimes with tight divergence it isn't as easy to see
especially to the untrained eye so here's an example
this here is tight divergence at first glance it might not look like it
but this is what price is doing run small pullback run meaning this here is
your lower low while the rsi indicator made a higher
low which is clear tight divergence again this might have
been harder to spot for some traders so here's an easy trick
at the top of your charts if you click this button right here it
will turn your chart into a line chart so let's do exactly that let's turn this
exact chart into a line chart now notice how you can
clearly see price making the lower low and the rsi
making a higher low showing a clear tight divergence and
then once you identify this on the line chart
jump back to candlesticks so here's another example
this here is where your divergence occurred and here is the movement that
price made run pull back run
price made a higher high while the rsi made a lower high
hence your divergence again let's switch to the line chart to show this more
clear here you can now clearly see the swings
of price higher high lower high clear divergence
and again when you're done just switch back to your candlesticks
so when we get to the strategies section you'll understand why tight divergence
is just as important as y divergence so again we have the two subtypes of
tight divergence which is one when the divergence occurs
at or inside of the overbought or oversold region
this is clearly occurring in the region or two when the divergence occurs close
to the overbought or oversold region notice
how it's close but not touching so let's put both wide
divergence and tight divergence on one chart as a
quick recap why divergence reversal why divergence
reversal why divergence reversal and then tight divergence here reversal
so as a quick recap here is our divergence hierarchy
now all divergence is good but just use this hierarchy to rank the quality of
the divergence in the trade you are looking at
so let's keep building on this and move on to the next section
which is combining divergence with confirmation
so divergence combined with confirmation means you look for price action
after the divergence occurs to confirm that the reversal is
real and not a fake out so let's break this down
this is a clear moving uptrend as price is making higher highs
and higher lows run pull back run pull back run you then spot this
clear wide divergence formation now this is
what we call divergence unconfirmed because it can start as a
divergence pull back slightly and then still
continue on and then you would have been faked out
and took a loss don't forget that you are trading
counter trend so just an rsi divergence alone
isn't enough because that would be guessing based off an indicator
so what you need to do is combine rsi divergence
with price action after it occurs in order to confirm that the reversal is
real now there are many price action
strategies we use in combination with divergence but to keep things simple for
this video one great way to do this is to apply a
dynamic trend line onto the immediate trend then
you wait for the breakthrough the trend line to occur which then confirms the
divergence and confirms the reversal as a bonus
this breakdown also made a lower low and at this point is when you go to the
lower time frames and start looking for short entries so
let's show this again
this is a clear moving downtrend as prices making lower highs
and lower lows you then spotted your clear
y divergence this again is your divergence
unconfirmed so what you do is you put a trend line
onto the immediate trend and wait for a break to occur
as price came up there would still be no trade for us as price failed to break
the trend line it's not until you finally had your
break here that we would consider long trade entries so you are probably
thinking why not just jump right into a trade at the second head of divergence
here well you don't know this move would
occur meaning price could have pulled back
slightly and then continued down again you are going counter trend
and counter trend trades need extra confirmation as they hold
more risk so this works the same with stocks
here's the disney stock you again had your moving uptrend
as price was making higher highs and higher lows
you had your clear y divergence you then had your trend line applied
and once you had price break through the trend line the divergence is confirmed
which presented a possible short trade opportunity
so let's go through the same concept but with tight divergence
here's your clear moving downtrend you then spotted your tight divergence
so let's switch this chart to a line chart to show this more clearly
again as you can clearly see higher low on the rsi
lower low on price which is divergence so jumping back to candlesticks
after this divergence was identified we put a trend line
over the immediate trend and once price broke through
is when the divergence is confirmed which presented
possible long trade opportunities so this works the same with stocks
here's the pinterest stock clear moving downtrend
you then spotted your tight divergence let's again switch to the line chart to
show this more clearly again as you can clearly see higher low
on the rsi and lower low on price which is
divergence so back to candlesticks so again
we put a trend line over the immediate trend and once price broke through
is when the divergence is confirmed which presented
possible long trade now here's a great example as to why you
need confirmation and why to not enter trades solely based
off of divergences here's the walmart stock price was
clearly in an uptrend as you had your run
pull back run pull back now you would have then spotted this great
wide divergence here and you thought to yourself this is a great short
opportunity what you are forgetting is that this is
a very strong uptrend as you should already know by now you
would only start considering short entries
after the divergence if you had the trendline break
a break through the key support and price making a lower low
without that the divergence was unconfirmed and there was no trade
to make matters worse a lot of traders went long at this
access point here where the trend line and key support level both lined up
perfectly this is actually a concept we discuss
with our members about knowing where price is coming from but
we will cover that in a future video so divergence combined with confirmation
is only the base concept we do not enter trades simply off of
these two factors now let's take this up a notch and move
on to the actual strategy section of this video in this
section we will be building on all concepts we
have discussed in past videos so if there's something you don't
understand make sure to go back and watch
all our older videos after you watch this one so let's get into it
so the foundation of this strategy is combining divergences
with key levels or areas of confluence for high quality
trade entries as a quick recap key levels or areas of confluence
are areas where many schools of traders are watching
for possible trade entries which increases the chances of a possible
reversal again if you need a refresher check out
our past videos now there are three variations to the
divergence plus key area rsi strategy type
one is divergence at a key level this uses only one time frame type 2
is candlestick price action at a key level
and divergence inside of those candlesticks on the lower timeframe
this type uses two time frames and type three
which is divergence at a key level and then looking for a trend change
inside of the leg2 head this type uses two time frames as well
so let's start with type one which is divergence
forming at a key level or area again type one involves using only
one time frame also you can find these setups on any time frame you choose to
trade with
so you look left and noticed that when price came up to this area
it hit and reversed drastically making this a key level
of resistance so you had it drawn in now as price came back up for
candlestick and resistance traders there were multiple entry points for
short trades but now as a divergence trader
once you noticed this wide divergence form right at key resistance
you would apply your trend line like this and once price broke it
with this bearish momentum candle is when you would start looking for trade
entries short this also shows why you should
never chase trades as there's always another trade
opportunity coming up so let's show this again going the other way
you look left and spotted this key area here where price reversed from
drastically and it is also the lowest point that price has reached in recent
time so you had it drawn in now as price came
back down not only did you have a reaction to this
level through the candle with the wick sticking out
you also had a great wide divergence form again a reaction does not equal a
trade so you put a trend line onto the
immediate trend like this and once price broke through the trend line
it shows that buyers actually stepped in at this level
then you would go to the lower time frames and start looking for trade
entries long so let's do the same thing except
with tight divergence again key support level because price
hit and reverse from here drastically as price came back down you had tight
divergence form right at this key level of support so
switching to the line chart again price made a lower low while the
rsi made a higher low showing a clear tight divergence so
let's jump back you then place your trend line on top of
the current trend and when price breaks the trend line
the support level and tight divergence are confirmed meaning
buyers actually stepped in at this level and this is when you would look for
trade entries long
so again you add your drastic reversal which gave you
your key support price came down and formed a tight divergence
key trendline applied through these multiple touch points and once price
broke through the divergence and support level is
confirmed and you would then look for long entries
so right now in the market the euro kiwi is creating one of these patterns you
add your key resistance and swing high level here
through these multiple reversals tight divergence has formed
so we put a trendline onto the immediate trend like this
but there is no trade unless price breaks through this trendline
because again price can continue up now type 1 of the rsi divergence strategy
is a great foundational strategy but we personally
do not trade using only one time frame because it doesn't give us
enough data and insight so let's take this up a notch
and move on to type 2 of the rsi divergence strategy
which is identifying candlestick patterns
at a key level or area and looking for divergence inside
of those candlesticks on the lower time frame
so before we continue a question we often get asked is
how do we create and edit our youtube videos
and how did we grow our channel so fast if you want to learn exactly how we do
it all head on over to our website at
wisetrade.com and we'll show you how to do this step by step
now type 2 uses two time frames and you can use any combination of time frames
you want as it all depends on your style and we'll discuss this further
so first we're going to break down the premise of this strategy and then we'll
go through it more in depth this here is the 12 hour time frame
which we really like using for medium term trades
so we notice these two points here where price reversed from
drastically which gave us support and we had it drawn in
now as price came back down to this level of support
you had no idea what would form you were waiting to see
if there would be candlesticks forming when price got to this area
you had multiple candlesticks with long wicks sticking out
showing that price is indeed reacting to this level
so most people would enter long right away but again
that would be guessing because price can react and stall at a key level
and still break right through so what do we do
we need to look inside of these candlesticks
on the lower time frame to see if there is price action
that shows us that a trend change is occurring
this is very key before you look inside of these candlesticks
you have no idea what you will find that is what price action is in a nutshell
which is reacting to what you see and not guessing
the direction of a trade so let's bring up the four hour time frame
and put it beside this one again here on your left is the 12 hour
time frame we just looked at and here on the right is the same asset
we are looking at but using the lower time frame
specifically the four hour time frame meaning each candlestick represents four
hours of time this support level is the same support
level here this downtrend here is the same
downtrend here now here's the key you identified your
long wick candlesticks add key support here but it wasn't
enough data for a trade entry so you looked inside
of those candlesticks on the lower time frame to see what you
had and this is what you found great
divergence that formed inside of the longwood candlesticks this
is a high quality trade now also notice how on the 12 hour time
frame you couldn't put a trend line onto the immediate trend
because the swings weren't wide enough but here on the four hour time frame
you can easily place a trendline onto the immediate trend
again you were waiting for a breakout which you got through the momentum
candle that then confirms the divergence and the candlesticks and the level of
support and that is when you would start looking for trade entries long
using the lower intraday time frames so let's show this again
before we continue we want to answer a question you probably have
which is what time frame combinations to use
again don't forget to leave your questions and comments below
so the answer to this question is simple any combination of time frames works
as it all depends on your style and speed of trade
and this is why we are going to show you all the different time frame
combinations now for our members and us we follow
very specific time frame combinations but that's because it suits our strategy
the best but for you as a trader choose a time frame combination that
best suits your strategy and your speed of trade so let's get
back into it
so this is the daily time frame you again spotted these two reversal points
giving you your key level of resistance so as price came back
up you had this candle here with the wick sticking out showing a reaction to
the level it's at this point that you would look
inside of this candle and start watching the lower time frames
and wait to see if you would get a trend change so let's put the four hour time
frame beside this one
same resistance level same uptrend and the area here we were looking at on the
daily it's the same area here on the four hour
time frame you had your clear divergence here
and a great wedge pattern forming so you had it drawn in
then once you had your break out of the wedge
on the bottom side and price making a lower low
the divergence is confirmed and you would start looking for short trade
entries on the lower intraday time frames so
we'll cover all the trading patterns in depth in a future video
so let's show this again this is the eight hour time frame
you identified your key reversal point here where price shot up from
so you had your support level drawn in as price came back down
you had your inside bar candle with the wick sticking out the top
showing a reaction to the level of support so after you spotted this
you would then want to look inside of these candlesticks
and inside of this area so let's pull up the four hour time frame and put it side
by side same support level same downtrend
and these candlesticks and area here is the same area right here
now notice how inside of your candlesticks
you had this great tight divergence forming let's pull up the line chart so
you can see it more clearly again price made a lower low while the
rsi made a higher low so it's clear
divergence so jumping back you then again put your trend line on to
the immediate trend and once you had your breakthrough as confirmation
you would then start looking for trade entries long using the lower intraday
time frames so let's show type 2 but with trend
trades this here is on crypto and the 12 hour
time frame you had a clear moving uptrend here
reversal point here that gave you your key level now as
price reached this area you had multiple candlesticks reacting to the level
the 50 ema also lines up perfectly with this level
so again we want to look inside of this area
so let's bring up the four hour time frame
same key level same downtrend and this area here
is this area here again clear divergence at the key level
trend line placed above and once you had your break you would start looking for
trade entries long as your directional bias is confirmed so
one more
here's the daily time frame this was your clear moving uptrend
key level here because of these two reversal points
so after we had these two perfect long wig candles reacting to the level
we wanted to look inside of them to see if we had price action
that signaled a possible trend change so let's pull up the four hour
same key level same pullback we had perfect
y divergence right at the key level and then you would place your trend line
above and once you had price break through you
would then look for trade entries long on the lower intraday time frames so
right now in the market the pound dollar is creating one of
these setups this here is the weekly time frame we
have our key level drawn in because of these reversal points where
price tanked down from showing how key this level is it is also
a swing high meaning the highest point that price has
reached we had a reaction to the level through this candlestick
with the wick sticking out but again a reaction doesn't equal a
trade so let's look into this candlestick here and pull up the daily
so on the left is the weekly time frame and on the right is the daily time frame
same resistance level same uptrend and this area here on the weekly is the
same area here on the daily now notice that you have great
divergence that has formed right at this key level of resistance
we then placed a trendline below so you should already know where we go from
here we do not start looking for short trade
entries unless we have a break of this key trend line
so let's take this even further and move on to type 3 of the rsi
divergence strategy this concept is more advanced
and we usually reserve it only for our members
but since it'll help you all and adds on top of everything that we have
previously discussed we're going to reveal it to you now
so type 3 of the rsi divergence strategy is finding divergence at a key level
and then looking inside of the leg 2 head
of that divergence for price action that signals
a trend change
now before we continue if you're enjoying this video make sure to hit the
thumbs up button and leave a comment below with your
questions thoughts or topics you want us to cover
that just goes a long way
so when would you use type 3 there are two reasons why
reason number one and type 3a is when you don't have good price action
on the main time frame you found the divergence on so you need to look inside
of the leg 2 head and reason number 2 and type
3b you want to get in with an earlier entry
right at the leg 2 divergence instead of waiting for the larger
trendline break so again you would need to look into the leg 2
head
so let's start with type 3a which is when you don't have good
price action this is the daily time frame you had your key level of
resistance here you then had a great wide divergence
form now here's the problem you didn't have a
good candlestick form at the key level all you had was a green
bullish candle also you are unable to put a trend line
onto this trend if you put it here it's too low and if
you put it like this it's too tight so again the two problems
no candlesticks for type 2 and no trend line for type 1 great level
no entry so to get around this you used
type 3 which is to look inside of the
divergence leg 2 head right here and see if we could find
price action that showed a trend change so that you could find the end of the
second head so let's bring up the four hour
time frame so again on the left was the daily time
frame we just looked at and on the right is the 4-hour timeframe
same resistance level same uptrend and this level here that we
were just looking at is this same level here
now notice on this time frame we had perfect y divergence
at the key level what this means is you have divergence
inside of the leg 2 head of the wider divergence
so this allows you to see when the leg 2 is possibly ending now to confirm it all
you again are able to place a trend line onto the immediate trend
on this time frame and then once you add your trend line break everything is
confirmed and you would start looking for trade entries short on the lower
intraday time frames so let's move on to type 3b which is
when you want an earlier entry so this is the 12 hour time frame and
you had your clear reversal point here giving you key resistance so you had
great wide divergence form right at the key resistance level
now the issue is that your trend line was placed at these swing lows here
meaning that you would have to wait for price to break it down here before you
could enter the market now you already had good candlesticks
forming at the key level so how do you get in with an earlier
entry right at this leg two head of divergence again you need to look
inside of it for a possible trend change so that you
could find the end of the second head so let's
bring up the four hour time frame same resistance level same uptrend
and the leg two head here is the same area here
now on this time frame you had a wedge pattern that is also divergence
and then once you had your break this confirmed
the end of the leg two head of the wider divergence
then you can get in with an earlier entry here
but for more secure traders you can still wait for the larger trendline
break and enter down here again it all comes down to your style
and how aggressive you want to take entries
but now we want to show you something very interesting which also brings us to
the final section of this video we're going to show you how our members
and us used divergence combined with correlations to
enter trades on tesla and apple during the deep s p 500 market
pullback now first what are correlations in
trading in simplified terms correlations means
how different assets move in relation to each other
so knowing that a positive correlation means when one
asset moves in a specific direction a positively correlated
asset will move in relative sync and in the same direction
an example of this is the s p 500 and its
positive correlation to u.s stocks when the s p 500 shows strength and
moves up often times u.s stocks will move in sync
and in the same direction which again is a positive correlation
again this is not the law we are stating this in relative terms
so just use it as guidance this also means an inverse correlation
is when one asset moves in a specific direction an
inversely correlated asset will go in the opposite direction
an example of this is the vix index being inversely
correlated with the s p 500 the vix index
is the volatility index also called the fear index
meaning when the vix rises it represents an increase
of fear or uncertainty in the market and since the vix
is inversely correlated to the s p 500 when the vix rises
and fear increases the s p 500 falls this is not the law we are stating
this in relative terms so just use it as guidance
now that you understand correlations let's break down how our members and us
used correlations in combination with divergence
for trade entries on tesla and apple during the recent market pullback
so let's first start with step one which was tracking
the s p 500 when you look at the monthly time frame
this is a very clear long term uptrend you then had your very long term trend
line that started all the way back to the great recession
and has been respected every time price has reached it which
shows how key this trend line is you then had this
very key support level here because of this reversal point now this
then gave us our access point or area of confluence here
where the trend line and support level crossed which we covered in our last
video you then had a perfect long wick candle right at this access
point showing that it was respected this time around now
this is very key even though this was a deep pullback
without price breaking this long-term trend line
and making a lower low the long-term uptrend is still intact
so after we had this very long wick candle react to the access point
this gave us a bullish bias but unconfirmed
because it is the monthly time frame and we don't enter trades on it
so what we needed to do is go to the daily
and look for price action that showed a trend change
inside of this downtrend and confirm the monthly price action
and the reason we need to do this is because even though your long-term trend
is an uptrend your short-term trend is still a
downtrend so we need the trend change from a downtrend to an uptrend
to be confirmed aka time frame confluence
so let's pull up the daily again same support level same trend line same
pullback and downtrend and this access point here is this same
area here first you had a tight divergence right
at the access point let's pop the line chart to show this
price made a lower low and the rsi made a higher low
showing clear divergence so back to candlesticks
you then place your trend line above and once price broke through it
you had your higher high which again confirms the trend change
and showing that the downtrend is over and that the larger uptrend can continue
so the monthly is now confirmed by the daily trend change
which then gave us a bullish and long bias
now this is where correlations comes in again we first found price action on the
s p 500 that gave us our bullish long bias then
since the s p 500 has a positive correlation
with u.s stocks this again gave us a bullish long bias on u.s stocks we were
watching this then brings us to the tesla stock
which is a u.s company and again gave us a bullish long bias on
it now this doesn't mean we jump in blindly
we still need to find a high quality entry so let's pull up the tesla stock
so here's the tesla monthly time frame we first
identified this key monthly level through the four clear
reversal points showing how key this level is if you watched our past videos
you would know that what you find on the higher time frames or what is visually
obvious on the higher time frames such as the
weekly and monthly are very very key levels so price then finally
broke through and old resistance becomes new support
so let's pull up the weekly which is where we found price action on
so same key level this key area here is this same area here
now on the weekly we had a perfect long wick candle form
right at the key level and exactly where the 50 ema crosses
making this an access point an area of high confluence
this again gave us a bullish bias but unconfirmed so we then needed to look
inside of this trend here for our trend change on the daily so
let's bring up the daily so on the left is the weekly we just
looked at and on the right is the daily same key level same pullback and this
area here is this same area here trendline placed
onto the immediate trend and once it broke and
made a higher high and the previous higher low the trend
change was confirmed it was at this point that we went to the
intraday time frames and took long entries using our entry strategy
now this was already a great long trade entry but to add even more strength
and increase the trade quality we used the correlation
to the s p 500 so let's pull it up and put it beside
so again the s p 500 had a reversal and fresh bullish momentum and the tesla
also had a bullish bias through its fresh breakout so knowing
this we used the correlation from the s p 500 to the tesla stock to
increase the trade quality making this an a plus trade entry and if
you have watched our past videos this trade setup would have been crystal
clear to you as we used every concept we have previously discussed so let's go
through the same concept but through the apple trade we took
so again here on the apple stock on the monthly time frame we had our key
level here because of this reversal and we had it drawn in
so let's confirm this on the weekly time frame
again same support level same pullback but here on the weekly
you also had a perfect trend line placed below this then gave you your access
point here where the trend line and key support
level crossed you then had a great longwick candle
react to the access point and area of confluence so both the
weekly and monthly are confluent but we need to look inside of this downtrend
for a trend change in order to confirm it is over so let's pull up the daily
same key level same pullback this area here
is this same area here now on the daily you also had
great divergence right at this key level trendline placed above
and once you had your breakthrough you would look for trade entries long
through the lower time frames using our entry strategy
now let's again bring up the s p 500 to show the correlating price action
so on the left the s p 500 had a fresh breakout and bullish momentum
and since it is correlated to the apple stock which also had a fresh breakout
and bullish momentum this made the trade a plus
now if you want to learn our exact intraday entry strategy
head on over to our website at wisetrade.com
also if you want to learn how we design and edit our videos
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[Music] oh
[Music] you