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A negative divergence occurs when price continues to make higher highs while the corresponding TSI readings make lower highs. In effect, price is rising on continually less and less momentum. Momentum to push the price higher is fading, as indicated by the TSI making lower and lower highs.
With futures one can bet that price will rise by BUYING futures contracts and hope to sell these contracts later at a higher price. OR, one can SELL futures contracts on the notion that one will be able to buy them back at a lower price sometime in the near future.
The latter tact is what I was doing with this third trade - the negative divergence setup.
Price then cratered (as expected) and just before price resumed a new upleg I covered my short position and took my money off the table.
My students were on time today (1:30 cst) and the door flung open just as I concluded this fourth trade.
Now if you are wondering why I write all these details, I will now tell you.
I believe that the True Strength Index indicator works - at least most of the time. And I believe that if my readers wanted to take the time to learn how the TSI works it would help them a great deal.
The purpose of my website is to help other people. I sincerely hope this post and the hundreds of posts that preceded this one are helpful to you.