I SUGGEST EVERY BEGINNER TRADER HERE TO DROP THE THINKING PATTERN OF OVERBOUGHT AND

OVERSOLD. THIS DOES NOT WORK ANYMORE. AN OVERBOUGHT STOCK CAN REMAIN OVERBOUGHT
FOR A LONG TIME AND VICE VERSA FOR OVERSOLD. IN FACT, OVERBOUGHT REPRESENTS STRENGTH NOT
WEAKNESS AND OVERSOLD REPRESENTS WEAKNESS NOT STRENGTH. NEVER SHORT STRENGTH JUST
BECAUSE RSI IS ABOVE 70 AND NEVER GET LONG A WEAKNESS JUST BECAUSE RSI IS BELOW 30.
FURTHER, DO NOT FOCUS ON REGULAR BEARISH DIVERGENCES THAT COME ABOVE 70 AND ALSO
IGNORE REGULAR BULLISH DIVERGENCES THAT COME BELOW 30. ALWAYS REMEMBER THAT IT IS
NORMAL FOR A SUPER BULLISH TREND TO HAVE REGULAR BEARISH DIVERGENCES TIME TO TIME. THEY
ARE NOT NECESSARILY REVERSALS, THEY CAN BE JUST A HALT BEFORE STOCK AND RSI RESUMES ITS
JOURNEY AGAIN. AS I ALWAYS SAY, FOCUS MORE ON HIDDEN DIVERGENCES BECAUSE THEY GIVE
SIGNALS IN THE DIRECTION OF THE TREND. FURTHER, THINK OF RSI IN TERMS OF ZONES, BULLISH ZONE
& BEARISH ZONE. A COMMON UNDERSTANDING IS THAT 20 TO 60 IS A BEARISH ZONE AND 80 TO 40 IS A
BULL ZONE. SO IF RSI IS AT 60, IT DOES NOT MEAN THE STOCK IS BULLISH, YOU MUST SEE WHETHER IT
HAS COME TO 60 FROM 20 OR FROM 80. ALSO, DO NOT SEE ABSOLUTE VALUE OF RSI IN ISOLATION. SO
IF RSI IS AT 20, DO NOT THINK IT'S A LONG OPPORTUNITY. RSI CAN JUST BOUNCE A LITTLE TO CORRECT
ITS OVERSOLD SITUATION AND THEN THE DOWNTREND CAN RESUME AGAIN. SIMILARLY IF RSI IS AT 70,
DO NOT THINK IT'S A SHORT OPPORTUNITY, RSI CAN CORRECT A LITTLE TO CORRECT ITS OVERBOUGHT
SITUATION AND UPTREND CAN RESUME AGAIN. ALWAYS FOCUS ON RANGE SHIFTS AND NOT OVERSOLD
AND OVERBOUGHT. SO THINK OF 20 TO 60 AS BEAR ZONE AND 80-40 AS BULL ZONE. REMEMBER I AM
NOT MENTIONING BULL ZONE AS 40-80 BUT AS 80-40. IT IS VERY IMPORTANT TO UNDERSTAND THIS. SO
IF RSI IS AT 70, IT MEANS IT IS IN BULL ZONE AND IT WILL REMAIN IN BULL ZONE TILL 40. ONLY IF 40
BREAKS THEN YOU CAN SAY THAT RANGE HAS SHIFTED AND YOU CAN SHORT THE BOUNCES. SIMILARLY
IF RSI IS AT 30, IT IS IN BEAR ZONE AND IT WILL REMAIN IN BEAR ZONE TILL 60. DO NOT BUY TILL IT
CROSSES THAT. ALSO NOTICE THAT 40-60 IS A NEUTRAL ZONE. SO ANY VALUE OF RSI BETWEEN 40-60
SHOULD BE SEEN FROM THE PERSPECTIVE OF WHETHER IT HAS COME TO THAT VALUE FROM BELOW 40-
60 OR FROM ABOVE 40-60. ALSO THE REASON OF CALLING 40-60 IS A NEUTRAL ZONE BECAUSE IT IS
PART OF BOTH BULL ZONE AND BEAR ZONE. ALSO YOU'D NOTICE THAT DURING MOST OF THE TRADING
RANGES, RSI IS 40-60. A GOOD UPTREND STARTS ABOVE 60 AND A GOOD DOWNTREND STARTS BELOW
40. TILL THEN, ITS RANGE-BOUND. I HOPE IT WILL GIVE YOU A NEW PERSPECTIVE.

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