RSI Swing Failure Forex Trading Setup
RSI forex swing failure can be a very accurate method for trading short term forex moves. It can also be used for trading long term forex trends but it is best suited for short term forex trading especially for those forex traders that trade reversals.
The RSI swing failure swing forex trading setup is a confirmation of a pending forex market reversal. This forex swing failure setups a leading breakout signal, it warns that a support or resistance level in the forex market is going to be penetrated. This forex setup should occur at values above 70 for an upward forex trend and values below 30 in a downward forex trend.
Swing Failure In an Upward Forex Trend
If the forex RSI Indicator hits 79 then pulls back to 72, then rises to 76 and finally drops to below 72 this is considered a failure swing forex RSI setup. Since the 72 level is an RSI support level and it has been penetrated it means that price will and follow and it will penetrate its support level.
In the example below, the forex RSI indicator hits 73 then pulls back to 56, this is a support level. The forex indicator then rises to 68 and then drops to below 56, thus breaking the support level. The forex price then follows afterwards breaking it support level. The forex RSI swing failure is a leading forex trading signal and it is confirmed when price also breaks it support level. Some forex traders open trades once the swing failure is complete while other forex traders wait for price confirmation, either way it is for a forex trader to decide what work best for them.
Forex RSI Swing Failure Setup in an Upward Forex Trend
Swing Failure In a Downward Forex Trend
If the forex RSI Indicator hits 20 then pulls back to 28, then falls to 24 and finally penetrates above 28, this is considered a failure swing setup. Since the 28 level is an RSI resistance level and it has been penetrated it means that forex price will and follow and it will penetrate its resistance level.
Forex RSI Swing Failure Setup in a Downward Forex Trend