Double Top and Double Bottom in RSI Strategy

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Double Top and Double Bottom in RSI Strategy

Sixty First session of Forex Training

Welcome back to Forex professional training in financial markets.

In this session Double Top & Double Bottom in RSI Strategy will be studied.

Double Top and Double Bottom in RSI Oscillator

RSI value can be set on 14, while 2 levels are adjusted on 30 and 70.

Whenever price crosses level 30 towards the top and level 70 towards the bottom after Double Bottom or Double Top has formed successively, a Buy or a Sell signal will be generated.

Tradeable Symbols

This strategy can be utilized on all symbols, especially EURUSD, GBPUSD, Silver, Gold and Oil.

Double Top and Double Bottom in RSI Strategy - Levels 30 and 70 Overbought and Oversold Regions

Timeframe

Although this strategy can be used in all timeframes, more suitable result and signals will be made in H4, Daily and longer timeframes.

Buy and Sell

When a Double Bottom pattern forms under the level 30 in RSI, and then RSI trend crosses level 30 towards the top on a spot where market price starts an uptrend, maybe by a Bullish candle, then a trader can place a Buy order.

When a Double Top pattern forms above the level 70 in RSI, and then RSI trend crosses level 70 towards the bottom on a spot where market price starts a downtrend, maybe by a Bearish candle, then a trader can place a Sell order.

Double Top and Double Bottom in RSI Strategy - Bullish and Bearish Trend after Reversal Trading Signals

Take profit / Stop Loss

Take profit price can be determined by:

  1. The available reversal pattern in a market price on the spot where RSI line crosses level 30 towards the top or level 70 towards the bottom.
  2. The available candle pattern on the given spot. TP amount equals the length of a candle.
  3. Whenever RSI trend touches level 50.

Stop Loss can be specified by candle or a reversal pattern on a market chart.

This strategy will generate a suitable and sound signal when it is combined with reversal patterns and candles, especially on H1 and longer timeframes.

There are several examples on GBPUSD chart of MT platform, in H1 timeframe.

Double Bottom pattern has formed on both market price and RSI, thus, as RSI has crossed level 30 towards the top, a trader could place a Buy order with certain TP and SL prices that could be calculated by a Double Bottom pattern of the market price.

Double Top and Double Bottom in RSI Strategy - MetaTrader Price Chart - Relative Strength Index

Another example on a Bearish trend, with two Double Bottom patterns on both market trend and RSI.

After RSI trend has crossed level 30, market trend moved upwards from the breakout point.

At the end of a Bullish trend Double Top patterns have formed on market trend and RSI simultaneously, followed by a downward trend.

Another Double Top pattern on an upward trend where a Double Top pattern has formed on RSI, too.

After RSI trend has passed level 70, a downward trend moved towards the bottom.

That concludes this session, until next time and another session take care.

Linkages & Notices

You can also view the video of this session available on the PFOREX Financial Video tutorials.

You can also find the video of this session on PFOREX YouTube Channel.

PFOREX Assist app provides BEST & FREE trading signals and market analysis. PFOREX Assist is available on App Store (iOS version) & Play Store (Android version).

The PDF file of this session is also available.


PFOREX Educational materials in text and video formats are developed by PFOREX Department of Education to enhance and improve investors’ knowledge and trading skills. Due to high risks and volatile fluctuations in financial markets, traders and investors must develop their trading skills and knowledge. It is strongly recommended to apply Risk and Capital Management when trading in financial market.

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