Expert4x
Forex expert Alex discusses the forex market and answers viewer questions in a discussion-based webinar. He shares his favorite reversal indicator, the RSI, and stresses the importance of looking for support/resistance and divergence to back up trades.
The Best Reversal Indicators for Forex Trading: Using the RSI and Divergence
Introduction
Welcome to the Expert Forex webinar. Today, we will be discussing the Forex market and answering common questions related to automated and manual Forex trading. Feel free to send in your questions, comments, or remarks. In this webinar, we will be going off the questions asked by the audience, starting with the topic of the best way to spot reversals and pullbacks with an EA.
Indicator for Spotting Reversals
The RSI is the most reliable reversal indicator found over the years. When using the RSI, in order to trade successfully, we must first find a reason for the reversal, such as bouncing off of an area of support. The RSI must also be used between a recent high and a recent low. It is a momentum indicator and oscillator that does not like trends. Divergence is another confirming signal to use when trading with the RSI, which can increase certainty.
Reversal Indicators and Momentum Indicators
Reversal indicators can be found through indicators such as the RSI and Divergence. Momentum indicators, on the other hand, include indicators such as Moving averages, MACD, and Bollinger Bands, which follow current trends and predict future trends.
Using Resistance and Support
Resistance and support play a significant role in trading Forex. In order to trade successfully, resistance and support areas must be known. Resistance areas show the highest price levels that current buyers are willing to pay for a currency, while support represents the lowest prices that current sellers are willing to sell a currency.
Conclusion
In conclusion, when trading Forex, mastering the art of spotting reversals is crucial. The RSI and divergence are the best reversal indicators that have been found over the years, as they provide certainty and increase the chances of successful trading. Resistance and support areas are also necessary to understand as they play a significant role in trading. Lastly, it is important to remember that Forex trading involves risks and is not suitable for all investors.
