Double Top and Double Bottom in RSI Strategy
Sixty First session of Forex Training
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Double Top and Double Bottom in RSI Oscillator
RSI value can be set on 14, while 2 levels are adjusted on 30 and 70.
This strategy can be utilized on all symbols, especially EURUSD, GBPUSD, Silver, Gold and Oil.
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.
Take profit / Stop Loss
Take profit price can be determined by:
- 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.
- The available candle pattern on the given spot. TP amount equals the length of a candle.
- 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.
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.