RSI and Moving Average Strategy
Sixtieth session of Forex Training
Welcome back to Forex professional training in financial markets.
In this session RSI and Moving Average Strategy will be studied.
RSI and Moving Average Strategy
RSI shows the overbought or oversold regions, in which a market price may continue its direction despite little support from traders, thus, a reversal point is highly probable.
These regions can be specified by the Price Action strategy in which a trader can find reversal points with sharp gradient in M30 or H1, thus, RSI value should be set on 8.
Alongside RSI, a trader must exploit Moving Average pattern, so EMA 3 and SMA 15 can be inserted.
Trader can utilize other patterns such as Stochastic 3.3.14 or MACD instead of RSI 8.
Whenever RSI or its alternative patterns detect a divergence, signal will be generated on the spot where Moving Average lines cross each other.
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Tradeable Symbols
This strategy can be exploited on all symbols, especially EURUSD and GBPUSD.
Time Frames
Although this strategy can be used in all timeframes, the best result can be derived from M30 and H1.
Buy or Sell signal
A Buy signal will be generated whenever EMA3 passes SMA15 towards the top after a divergence.
A Sell signal will be produced whenever EMA3 crosses SMA15 towards the bottom after a divergence.
TP and SL Limit
First TP price may be from 15 pips to 23 pips, while second TP price can be from 27 pips to 30 pips.
SL price can be lower than the Low price of the utilized candle pattern in a Buy order, or higher than the High price in a Sell order.
Otherwise, a trader can determine SL value 14 to 23 pips away from the entry price.
On GBPUSD chart, in H1 timeframe, trader can detect a divergence formed by the RSI pattern, which shows that despite a downward trend, most of the traders closed their Sell orders and little traders support the downtrend.
EMA3 has passed SMA15 towards the top on this candle, thus, trader could place a Buy order.
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In another example, trend moved towards the top, while RSI showed little support for an upward direction, thus, two divergences have been formed.
After both divergences, EMA3 has crossed SMA15 towards the bottom where a trader could place Sell orders.
That concludes this session, until next time and another session take care.