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35
Chart 9 (below) also has 5 years of data displayed, and shows the traditional overbought/oversold
Stochastic indicator, with several successful divergences highlighted. You will also spot some divergences
that did not work out.
When the market is overbought or oversold, and a divergence is forming with RSI (Chart 8), and the
Stochastic is showing a similar picture, and the cyclic outlook suggests a change in trend, your conviction
begins to grow.
Chart 9
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