GENERIC POST-BUBBLE STRONG REVERSAL INDICATOR
See update ⊜ at bottom after reading the description.
When binned over 1-week intervals, we easily see the RSI (Relative Strength Index) fall dramatically, indeed nearly vertically, at the burst of each 'bubble', as expected when viewed in this way. I suggest that one should make a note of the first significant recovery segment after these drops —as indicated by a relatively sharp/discontinuous change at one end, creating a region of convex interior— and record the relative percentage change over which it occurs: call that "A".
The next time a relative percentage change is observed ("B", say) to be greater than or approximately equal to the inverse of "A", (i.e. B ≳ -A), where it is again bounded on at least one side by a semi-discontinuous change —up, down or sideways; it does not matter— forming another mostly convex region, (as in the case of "A")— I claim that this will signal the bottom of that short-term crash and thus begin the interlude before the next 'bubble' inflates; and that, furthermore, the RSI (1W) will not again fall beneath the threshold set by the most recent recovery region, (e.g. ~42-48, in this most recent case.), for at least 23 weeks hence, or until after a new bubble bursts, whichever comes first.
Because my hypothesis also involves the convexity of the regions as a premise, it is possible this most recent recovery is not yet complete, as it does not strictly adhere to that assumption. However, my overall point is flexible enough to not be needlessly entrenched in that aspect. Also, the aforementioned features are all relative so, while I use RSI (14, close), other parameters revealing similar structure may be used as well, though I've not yet explored the merit of such variations.
⊜ Update: For a more expansive view of this concept, including implicative evidence regarding the recent bubble period offset correction, see my newly published chart I've linked to this one "INTRA-BUBBLE LOWS PERIOD ... " — an early preview of which can be see in the chart image here
or an even earlier version (same basic content) in the comments section. — If you were linked here from the other than you already know all of that anyway.
Note: As with all my charts, these findings are statistical. I do not pretend to have any insider information or special knowledge of market psychology which should contribute additional meaning to these observations.
When binned over 1-week intervals, we easily see the RSI (Relative Strength Index) fall dramatically, indeed nearly vertically, at the burst of each 'bubble', as expected when viewed in this way. I suggest that one should make a note of the first significant recovery segment after these drops —as indicated by a relatively sharp/discontinuous change at one end, creating a region of convex interior— and record the relative percentage change over which it occurs: call that "A".
The next time a relative percentage change is observed ("B", say) to be greater than or approximately equal to the inverse of "A", (i.e. B ≳ -A), where it is again bounded on at least one side by a semi-discontinuous change —up, down or sideways; it does not matter— forming another mostly convex region, (as in the case of "A")— I claim that this will signal the bottom of that short-term crash and thus begin the interlude before the next 'bubble' inflates; and that, furthermore, the RSI (1W) will not again fall beneath the threshold set by the most recent recovery region, (e.g. ~42-48, in this most recent case.), for at least 23 weeks hence, or until after a new bubble bursts, whichever comes first.
Because my hypothesis also involves the convexity of the regions as a premise, it is possible this most recent recovery is not yet complete, as it does not strictly adhere to that assumption. However, my overall point is flexible enough to not be needlessly entrenched in that aspect. Also, the aforementioned features are all relative so, while I use RSI (14, close), other parameters revealing similar structure may be used as well, though I've not yet explored the merit of such variations.
⊜ Update: For a more expansive view of this concept, including implicative evidence regarding the recent bubble period offset correction, see my newly published chart I've linked to this one "INTRA-BUBBLE LOWS PERIOD ... " — an early preview of which can be see in the chart image here
Note: As with all my charts, these findings are statistical. I do not pretend to have any insider information or special knowledge of market psychology which should contribute additional meaning to these observations.
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