The RSI Forex strategy combines the RSI (Relative Strength Index) oscillator with a reduced lag moving average trend following trading system.
This powerful combination will provide traders with better entry and exit signals on any currency pair.
The reduced lag moving average indicator looks for trend direction while the RSI indicator provides us with the actual entry and exit.
This simple RSI based strategy suits scalping, day trading and swing trading.
Beginners and seasoned traders can benefit from this trading strategy.
MetaTrader 4 Indicators: reducedlagma.ex4 (Inputs Variable Modified; MA_Period=36, MA_Sampling_Period=24, Colors Width Modified; #0=2, #1=2), Relative Strength Index.ex4 (Parameters Modified; Period=19)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day, 1-Week, 1-Month
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example: EUR/USD (EURO / US Dollar), H1 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the blue line of the reducedlagma custom indicator crosses below the indicator’s red line in a bottom up manner as shown on Fig. 1.0, price is said to be pushed to the upside, thus a signal to buy the selected currency pair.
- If the dodger blue line of the Relative Strength Index Metatrader 4 forex indicator breaksand stays above the 50.00 horizontal level as seen on Fig. 1.0, the general market sentiment is said to be bullish, as such a buy will suffice.
Stop Loss for Buy Entry: Place stop loss 5 pips below support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the blue line of the reducedlagma forex indicator intersects its red line while a bullish trend is ongoing, bulls power is said to be weaning, therefore it is a trigger to exit or take profit at once.
- If the dodger blue line of the Relative Strength Index indicator dips below the 50.00 horizontal level during the course of a bullish trend (see Fig. 1.0), it is a trigger to exit or take profit immediately.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the blue line of the reducedlagma custom indicator crosses above the indicator’s red line in a top downward fashion as illustrated on Fig. 1.1, bears are said to be driving sentiment, thus a signal to sell the designated currency pair.
- If the dodger blue line of the Relative Strength Index forex indicator breaksand hovers below the 50.00 reference level as depicted on Fig. 1.1, the overall market sentiment is said to be bearish, as such a sell will do.
Stop Loss for Sell Entry: Place stop loss 5 pips above resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the blue line of the reducedlagma forex indicator intersects its red line during the course of a bearish trend, it is signaling a likely end in bearish sentiments, therefore it is a trigger to exit or take profit forthwith.
- If the dodger blue line of the Relative Strength Index indicator surges above the 50.00 reference level while a bearish trend is ongoing (refer to Fig. 1.0), it is a trigger to exit or take profit straightaway.
Sell Trade Example: EUR/USD (EURO / US Dollar), H1 Chart
About The Forex Technical Indicators Used
The reducedlagma custom indicator is an advanced moving average indicator that eliminates lag, thereby reacting faster to changes in price.
The Relative Strength Index is a momentum indicator that gauges the magnitude of recent price changes to determine overbought or oversold conditions in the price of a forex pair.
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