RSI – Relative Strength Index is a technical indicator used in the analysis of financial markets. It intends to chart the current and historical strength or weakness of a stock or market based on a recent trading period’s closing prices.
Using the RSI indicator and Support/Resistance line in combination, you can easily spot entry signals when the price has enough strength to reverse. This article will guide you to choose a session time, position, timing to trade.
RSI indicator combines Support and Resistance
The RSI shows the relative dynamics of the prices at a fixed time. It demonstrated that the RSI indicator is hugely useful to trade reversal based on a signal called RSI divergence.
By combining the signal divergence with the Support and Resistance indicator, you will capture the exact reversal point. When the price touched the threshold, it was also the time when the RSI started to diverge.
Because the RSI is a slow indicator – a momentum indicator, this combination only applies for long trades. A suitable position pair is a 5-minute session with a 30-minute order, a 10-minute one with a 60-minute one. You can also enter a session order 3 hours a day.
Opening order signal
Open an up order
When the RSI divergence appears, the price is going up, while the RSI is falling. At the same time, the price is hitting the Resistance. 90% sure after that the price will turn downside. You need to open an order to increase FTT with a long position, at least six times in length.
Open a down order
When you encounter an RSI convergence signal and the signal touching the Resistance, open a down order of FTT for six times longer than the session. Now the price is down, the RSI is pointing up, and the price hits the Resistance, but I am confident that soon the price will follow the RSI and the Resistance.
It does not matter whether the RSI divergence, weak convergence or is strong. Even if the RSI is flat, the good news is that it does not move in the same direction as the trend. RSI proves that there is a momentum holding, not going up. And it happened when the price hit the threshold, so the reversal is the point we will pay attention to.