Buy the dip / sell on a bounce signal — recently confirmed in EUR/USD [RCI 3-line + BODSOR]

RCI Three-LineandBODSORApplications

One of the characteristics of the RCI three-line (RCI9, RCI26, RCI52) is

“When the three RCI lines align in the same direction, price movement in that direction tends to be larger.”

There is such a feature.

If RCI26 and RCI52 are rising (falling) and RCI9 is falling (rising),
when RCI9 reverses,“the three RCIs align in the same direction”will occur.

Therefore, detecting when RCI9 will reverse is very important.

(Case by case, but simply waiting for a confirmed reversal of RCI9 often leads to significant lag.)


To detect as early as possible the timing when the momentum of the rise (or fall) of RCI9 weakens,
BODSOR was developed.


The figure below is the EUR/USD 15-minute chart from April 5–6, 2018.

EUR/USD 15-minute

Upper: BODSOR
Lower: RCI three lines (red: RCI9, light blue: RCI26, yellow: RCI52)

(1) Retracement Sell Signal (yellow arrows circled)

Only RCI9 among the three lines is clearly rising.
If RCI9 reverses downward, all three RCIs may align downward.
In other words, price may undergo a strong decline.

In this situation,BODSOR’s retracement sell signal (yellow arrow) lights up.

Immediately after the BODSORsignal lights, five bearish candles occur in succession. This case shows the retracement sell signal functions well.



(2) Buy on Dips Signal (pink arrows circled)

Among the three lines, only RCI9 is clearly falling.
If RCI9 reverses upward, all three RCIs may align upward.
In other words, price may rise strongly.

In this situation,BODSOR’s buy on dips signal (pink arrows) lights up.

Immediately after the BODSORsignal lights, a real-bodied bullish candle forms, and
price continues to rise, so in this case the signal works well as a buy on dips indicator.



Indicator displaying Buy on Dips and Retracement Sell signals【BODSOR】


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http://bodsor.blog.fc2.com/

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