Learn the RSI forex indicator strategy, which monitors price changes to determine overbought or oversold levels. Use it as a tool for beginners to decide when to buy or sell an asset. There are false positives, so it can’t be followed blindly. The RSI successfully combines with other confirmations such as price action and can help identify winning trades. The 50, 30 and 70 lines are used to determine buy/sell opportunities, and the middle line can also suggest ideal times to buy. The strategy has shown impressive results in live trades, allowing the trader to make thousands of dollars per week. TradingView.com is recommended to access the RSI for free.

The Power of the RSI Indicator: A Free Forex Strategy

Introduction

Every forex trader desires that one indicator that will take them from being a newbie to a pro. In this article, we will introduce you to the secret weapon that you have had in front of you all this while – the Relative Strength Index (RSI). We will teach you how to install and use it properly, and we will highlight some trades that we took using this indicator last week.

What is the RSI Indicator?

The RSI is a momentum indicator that uses the price changes of an asset to determine overbought or oversold levels for any asset, including stocks, forex, cryptos, etc. For beginners, the RSI is an excellent tool to determine whether an asset is overbought or oversold. When the RSI shows an asset or currency pair is oversold, it is a good time to buy. In contrast, if the RSI indicates that it is overbought, it is an excellent opportunity to sell. While the RSI is not a perfect indicator and could give false positives, it is a potent tool when used correctly.

Installing the RSI Indicator

To get started, head over to TradingView.com, which offers a user-friendly interface for beginners. First, you need to sign up for a free account on TradingView. Afterward, navigate to “Indicators” on the TradingView platform and select the “Relative Strength Index.” Once installed, you can modify it based on your preferences. However, for this strategy, we won’t make any changes to the default settings.

Using the RSI Indicator

The RSI is a versatile indicator and can be used in different ways. For instance, some traders use the 70, 50, and 30 lines in determining buy or sell opportunities.

– When the price crosses above the 70-line, there is an overbought signal, and it’s a good time to enter a sell position.
– If the price crosses below the 30-line, there is an oversold signal, and it’s a good time to enter a buy position.
– The 50-line represents a neutral zone. When the indicator crosses above the line, a bullish signal is triggered, and when it crosses below the line, a bearish signal is triggered.

Moreover, the middle line of the RSI can serve as a confirmation of the previous RSI signals. For instance, when the price crosses above the middle line, it’s an excellent opportunity to enter a buy position.

Example Trades

To demonstrate the effectiveness of the RSI strategy, we have highlighted three live trades that we took last week using this indicator.

Trade 1: USD/CHF

We took a sell position on the USD/CHF pair using the 50 RSI line as our main confirmation. We also identified some support and resistance levels and used price action to confirm our entry. The trade netted us a profit of $1,494.

Trade 2: EUR/USD

We used the RSI at the 50-line to identify a potential sell opportunity on the EUR/USD pair. Our entry was confirmed by a bearish engulfing candlestick pattern, and we exited the trade with a profit of $1,650.

Trade 3: EUR/GBP

We identified an overbought signal on the EUR/GBP pair with the RSI above the 70-line. We also noticed some resistance levels, and this was confirmed by a bearish engulfing pattern. Our trade netted us a profit of $1,150.

Conclusion

In conclusion, the RSI is an essential tool for forex traders, and it’s widely used by traders of all skill levels. If used correctly, it can significantly improve your trading results. We hope this article has provided you with some insights into how to use the RSI indicator to improve your trading results. Happy trading!