
Chart 6 - There  are  four  steps  to  construct  a  mechanical  buy  signalillustrated  on  the  following  chart  with  buy  signals  for  an   RSI3M3oscillator:
     1. The RSI3M3 drops below the buy line at 30. By  dropping  below  the        buy line the oscillator shows an oversold condition common at cycle        bottoms.     2. The oscillator turns up to show the market momentum  is  reversing.        The price bar that turned the oscillator up is colored or thickened        to show that it is a setup bar.     3. A buy stop to go long is placed one tick  above  the  high  of  the        setup bar. By waiting for the high of the setup bar to be exceeded,        instead of trading on the close,  the accuracy of the buy signal is        increased from 10% to 25%, depending upon market and time frame.     4. Once a market is entered a protective sell stop is placed one  tick        below the cycle bottom. Sell stops would be placed one tick below A        and B. In A the setup bar was  also  the  cycle  bottom  and  entry        occurred the following day. In B the  setup  bar  occurs  two  days        before the cycle bottom, but entry occurs  the  day  following  the        cycle bottom.