RSI Reversals, Divergences and the RSI Paint Indicator

Many Forex traders have heard about RSI, the Relative Strength Index in particular from traders who evaluate a trade in the currency market and then say there is a divergence forming and that the price of a currency is overbought or oversold. When you hear this you should cover your ears or eyes and make loud noises until the person stops talking.

RSI does point out divergences between price and momentum but divergences are very inconsistent to trade. Ask anyone who has tried to trade them. Secondly, most traders including experts miss most of the divergences on the chart because they try to locate them manually, third, RSI does not predict price as being overbought of oversold. Last, little known RSI Reversals drawn by The RSI Paint Indicator tell the Forex trader when momentum is shifting in his or her favor.

Divergences are inconsistent to trade

Divergences are actually, in most cases, signals that momentum is slowly and about to retrace. They are inconsistent because they are against the trend and because trend strength is so difficult to measure.

Most traders can't find all the divergences

When you are manually locating the divergences on RSI and Price you will miss most of them. The only way to locate them all is to use an RSI Indicator that locates them all for you. In this way the computer does the work regardless of how many currency pairs you are trading. The RSI Paint Indicator was designed to do just that plus much more which we will point out shortly.

RSI does not predict overbought and oversold

Statistical data shows that the best place to sell is not at 70 RSI and buy at 30 RSI. Following this prescription will lead to failure. Successful RSI signals however relative to their levels can be tracked so as to put RSI traders in position to make highly successful trades. How?

RSI Reversals, the key to success

Few people including the so called experts understand RSI Reversals. The RSI Paint Indicator draws these on the RSI so that the Forex trader can locate them in order to trade "with" the trend. They are the counter signal to divergences. When a trader sees divergences they will know that in most cases the next signals to watch for are reversals which signal momentum in the direction of the trend. Both of these signals, divergences and reversals, are automatically draw for the trader using The RSI Paint Indicator.

Traders who look deeper than the typical information on RSI on most websites will find that RSI provides information that will allow a trader to trade RSI as a standalone system, in particular, when the signals that are the key to success are drawn for them using The RSI Paint Indicator.

Read more...

RSI Reversals, Divergences and the RSI Paint Indicator

Many Forex traders have heard about RSI, the Relative Strength Index in particular from traders who evaluate a trade in the currency market and then say there is a divergence forming and that the price of a currency is overbought or oversold. When you hear this you should cover your ears or eyes and make loud noises until the person stops talking.

RSI does point out divergences between price and momentum but divergences are very inconsistent to trade. Ask anyone who has tried to trade them. Secondly, most traders including experts miss most of the divergences on the chart because they try to locate them manually, third, RSI does not predict price as being overbought of oversold. Last, little known RSI Reversals drawn by The RSI Paint Indicator tell the Forex trader when momentum is shifting in his or her favor.

Divergences are inconsistent to trade

Divergences are actually, in most cases, signals that momentum is slowly and about to retrace. They are inconsistent because they are against the trend and because trend strength is so difficult to measure.

Most traders can't find all the divergences

When you are manually locating the divergences on RSI and Price you will miss most of them. The only way to locate them all is to use an RSI Indicator that locates them all for you. In this way the computer does the work regardless of how many currency pairs you are trading. The RSI Paint Indicator was designed to do just that plus much more which we will point out shortly.

RSI does not predict overbought and oversold

Statistical data shows that the best place to sell is not at 70 RSI and buy at 30 RSI. Following this prescription will lead to failure. Successful RSI signals however relative to their levels can be tracked so as to put RSI traders in position to make highly successful trades. How?

RSI Reversals, the key to success

Few people including the so called experts understand RSI Reversals. The RSI Paint Indicator draws these on the RSI so that the Forex trader can locate them in order to trade "with" the trend. They are the counter signal to divergences. When a trader sees divergences they will know that in most cases the next signals to watch for are reversals which signal momentum in the direction of the trend. Both of these signals, divergences and reversals, are automatically draw for the trader using The RSI Paint Indicator.

Traders who look deeper than the typical information on RSI on most websites will find that RSI provides information that will allow a trader to trade RSI as a standalone system, in particular, when the signals that are the key to success are drawn for them using The RSI Paint Indicator.

Read more...

How to Identify Reversals in Forex

If you are serious about trading forex for a living, there is one thing you must learn which is how to identify price reversals. There are 2 main benefits if you are able to know when exactly the price is reversing.

* You can exit your profiting position and collect the profit before it is taken back by the market.

* You can take a position in the direction of the reverse to make some profit.

Therefore you have to pay extra attention to what I am going to reveal below and here are how you can identify a reversal.

1) Use Candlestick Pattern: There are a few candlestick patterns that are showing sign of reversal in action. They are Railway track sometime also known as Tweezer, Morning or Evening Star, Hammer and 123 Top and Bottom. These are patterns that are formed when the traders knew that they are in the wrong side of the position and then quickly exit and place a trade in the opposite direction.

2) Use Moving Averages: You can also made use of a short term moving average and a long term moving average to help you identify reversal. When the short term EMA cuts above or below the long term EMA, it is a sign of reversal. You can use the moving averages crossover together with candlestick patterns to have a better analysis on whether there is a reversal coming or not.

3) Use Oscillating Indicators: You can make use of oscillating indicator like RSI or Stochastic to help you to confirm reversal. These are indicators that you can use to confirm the reversal that you identify with the above 2 methods. When you identify a reversal in an uptrend, you should look at your oscillator to check if it is overbought or not. If it is indeed overbought, you can wait for the oscillator to point down before you enter a trade. If you are in a downtrend, all you have to do is the exact opposite.

These are the steps that I take to identify a reversal in price and I find them pretty effective. It is better for you to identify reversal in the higher time frame so that you can predict the trend in the lower time frame. With the trend identify, you can confidently ride the trend in the lower time frames. So you can now spend some time to go through the methods stated above and check them out with your charts to see their effectiveness.

Read more...