5 Trading Strategies using RSI

[fawfx]

1. Overbought\Oversold​

When the RSI rises above 70, it is considered overbought; when it falls below 30, it is considered oversold. These traditional levels can also be adjusted to fit the security better if necessary. For example, if security consistently reaches the overbought level of 70, you may want to increase this level to 80.

Please remember that during strong trends, the RSI may remain in overbought or oversold territory for extended periods.

2. Patterns​

RSI also frequently forms chart patterns that may or may not be visible on the underlying price chart, such as double tops, bottoms, and trend lines. Look for support or resistance on the RSI as well.

3. Trending Market​

The RSI tends to remain in the 40 to 90 range during an uptrend or bull market, with the 40-50 zone acting as support. The RSI stays between 10 and 60 during a downtrend or bear market, with the 50-60 zone acting as resistance. These ranges will vary depending on the RSI settings and the strength of the underlying trend of the security or market.

4. Divergences ​

If underlying prices make a new high or low that the RSI does not confirm, the divergence may indicate a price reversal. A Top Swing Failure occurs when the RSI makes a lower high and moves lower below a previous low. If the RSI makes a higher low and rises, a Bottom Swing Failure occurs.

5. RSI with Keltner Channel Indicator​

We examine the Keltner Channel’s slope: an upward slope for possible long entries and a downward slope for possible short positions. When the RSI closes above 50, and the Keltner Channel slope is upward, we look for buy entries. We look for short entries when the RSI falls below 50, and the Keltner Channel slopes downward.

When we enter the market long, we place our stop-loss order below the Keltner Channel, and when we enter the short market, we place our stop-loss order above the Keltner Channel. We should use a trailing stop if we want to ride the trend as much as possible.

 

[newbietrader123]

1. Overbought\Oversold​

When the RSI rises above 70, it is considered overbought; when it falls below 30, it is considered oversold. These traditional levels can also be adjusted to fit the security better if necessary. For example, if security consistently reaches the overbought level of 70, you may want to increase this level to 80.

Please remember that during strong trends, the RSI may remain in overbought or oversold territory for extended periods.

2. Patterns​

RSI also frequently forms chart patterns that may or may not be visible on the underlying price chart, such as double tops, bottoms, and trend lines. Look for support or resistance on the RSI as well.

3. Trending Market​

The RSI tends to remain in the 40 to 90 range during an uptrend or bull market, with the 40-50 zone acting as support. The RSI stays between 10 and 60 during a downtrend or bear market, with the 50-60 zone acting as resistance. These ranges will vary depending on the RSI settings and the strength of the underlying trend of the security or market.

4. Divergences ​

If underlying prices make a new high or low that the RSI does not confirm, the divergence may indicate a price reversal. A Top Swing Failure occurs when the RSI makes a lower high and moves lower below a previous low. If the RSI makes a higher low and rises, a Bottom Swing Failure occurs.

5. RSI with Keltner Channel Indicator​

We examine the Keltner Channel’s slope: an upward slope for possible long entries and a downward slope for possible short positions. When the RSI closes above 50, and the Keltner Channel slope is upward, we look for buy entries. We look for short entries when the RSI falls below 50, and the Keltner Channel slopes downward.

When we enter the market long, we place our stop-loss order below the Keltner Channel, and when we enter the short market, we place our stop-loss order above the Keltner Channel. We should use a trailing stop if we want to ride the trend as much as possible.

I have seen if the RSI is over 50, then it's an uptrendung market. Vice-versa for downtrend market. But I never thought of combining with the Keltner channel.