What is RSI Indicator? - Definition of RSI Indicator
RSI indicator - RSI indicators is a popular forex technical indicator that can be found on the - Indicators List on this website. RSI indicator is used by traders to forecast price movement based on the chart price analysis done using this RSI indicator. Traders can use the RSI buy and Sell Signals explained below to determine when to open a buy or sell trade when using this RSI indicator. By using RSI and other indicators combinations traders can learn how to make decisions about market entry and market exit.
What's RSI Indicator? RSI Indicator
How Do You Combine Forex Indicators with RSI? - Adding RSI Indicator in MT4
Which Indicator is the Best to Combine with RSI?
Which is the best RSI indicator combination for forex trading?
The most popular indicators combined with RSI are:
- MAs Forex Indicator
- MACD
- Bollinger Band Indicator
- Stochastic Indicator
- Ichimoku Kinko Hyo Indicator
- Parabolic SAR
Which is the best RSI indicator combination for Forex trading? - RSI MT4 indicators
What Indicators to Combine with RSI?
Get additional indicators in addition to RSI indicator which will determine the trend of the forex market as well as others that confirm the market trend. By combining forex indicators that determine trend & others that confirm the trend & combining these indicators with Forex RSI indicator a trader will come up with a RSI based system that they can test using a forex practice trading demo account on the MetaTrader 4 software.
This RSI based system will also help traders to determine when there is a market reversal based on the indicators signals generated and therefore trades can know when to exit the market if they have open trades.
What is RSI Indicator Based Trading? Indicator based system to interpret price & provide trading signals.
What is the Best RSI Strategy?
How to Choose the Best RSI Strategy
For traders researching on What is the best RSI strategy - the following learn forex tutorials will help traders on the steps required to tutorial them with coming up with the best strategy for trading forex market based on the RSI indicator system.
How to Create RSI Systems - Best Forex Indicators Combination for RSI
- What is RSI Indicator Strategy
- Developing RSI Strategy Template
- Writing RSI Strategy Rules
- Generating RSI Buy and RSI Sell Signals
- Creating RSI Indicator Forex System Tips
About RSI Indicator Explained
RSI RSI Analysis & RSI Signals
Created by J. Welles Wilder, explained in the book "New Concepts in Technical Systems".
Relative Strength Index is the most popular indicator and it's a momentum oscillator & a trend following indicator. RSI compares a trading currency magnitude of the recent price gains against its magnitude of recent losses price losses & plots this data on a scale of values which ranges between 0-100.
Relative Strength Index measures the momentum of a currency pair; values above 50 signify bullish momentum while values below 50 center-line signify bearish momentum.
- RSI is plotted as a green line
- Horizontal dashed lines are plotted to identifying overbought & oversold levels are i.e. 70/30 levels respectively.
FX Analysis & How to Generate Signals
There are several methods used to trade, these are:
50-level Cross over Signals
- Buy signal - when the indicator crosses above 50 a buy/bullish trade signal is given.
- Sell Signal - when the indicator crosses below 50 a sell/bearish signal is given.
RSI Trading Chart Setup Patterns
Traders can draw trendlines & map out chart setups on the RSI. The RSI often forms patterns such as head and shoulders pattern which might not have formed clearly on the price chart.
FX Support/Resistance Breakouts
RSI is a leading indicator & can be used to predict Support/Resistance Breakouts before price breaks its support/resistance level. RSI uses the swing failure signal to predict when price is about to break support & resistance areas.
Swing Failure - Support & Resistance Break out
Overbought/Oversold Conditions on Indicator
- Overbought- levels above 80
- Oversold- levels below 20
These levels can be used to generate FX signals such as when RSI turns up from below 20 after oversold, buy & sell when RSI crosses to below 80 after overbought, sell. These signals aren't suitable for trading FX because they're prone to a lot of fake outs.
Divergence Setups
Divergence trading is one of analysis method used to trade reversals of the price trends. There are 4 types of divergences that can be traded with this trading indicator covered in the divergence tutorial on this website.
