Thursday, January 14, 2016
Another Divergence Setup on the SP500
The 1-hour chart on the SP500 just showed this beautiful setup. An enormous bullish engulfing candlestick just closed and the RSI oscillator is showing a good amount of divergence. Stocks have been dumping hard for the past two weeks, so maybe this setup is finally signalling that market sentiment is about to shift. I don't really trade Index Futures/CFDs, but if this setup occurred on an FX pair, I would enter a buy at the high of that bullish engulfing bar. These setups don't always work, so I always place my entry orders just a bit above than the close of the bar, usually just a bit above the high.
