RSI Swing Failure Trading Setup

RSI swing failure can be a very accurate method for trading short term Indices moves. It can also be used for trading long term trends but it is best suited for short term Indices especially for those traders that trade reversals.

The RSI swing failure swing trading setup is a confirmation of a pending market reversal. This swing failure setups a leading breakout signal, it warns that a support or resistance level in the market is going to be penetrated. This setup should occur at values above 70 for an upward trend and values below 30 in a downward trend.

Swing Failure In an Upward Trend

If the Indices RSI Trading Indicator hits 79 then pulls back to 72, then rises to 76 & finally drops to below 72 this is considered a failure swing RSI setup. Since the 72 level is an RSI support level and it has been penetrated it means that price will and follow & it'll penetrate its support level.

In the example below, Indices RSI indicator hits 73 then pulls back to 56, this is a support level. The indicator then rises to 68 & then drops to below 56, thus breaking the support level. The price then follows afterwards breaking it support level. The RSI swing failure is a leading trading signal and it's confirmed when price also breaks it support level. Some traders open trades once the swing failure is complete while other Stock traders wait for price confirmation, either way it is for a trader to decide what work best for them.

Indices RSI Swing Failure Setup in an Upward Trend

Swing Failure In a Downward Trend

If the Indices RSI Trading Indicator hits 20 then pulls back to 28, then falls to 24 & 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 price will and follow & it'll penetrate its resistance level.

Indices RSI Swing Failure Setup in a Downward Trend