This RSI trading system uses the 20 period simple moving average 20 SMA and is perfect for an easy swing trading strategy in markets such as Forex.
The RSI trading indicator is a measure of the relative strength of the market and is often used as an overbought and oversold technical indicator. As with any trading strategy, you want to make sure you are looking at a trending market which is quite easy to see if using a moving average. You can see when price chops back and forth through a moving average, you are looking at a market in consolidation. A gap between the moving average 20 SMA favors a trending outlook on this time frame.
As a Forex trader, you are looking at some of the best trending markets available. This is a great strategy to take full advantage of that fact. If you have time to sit at your computer and have identified a trending trading session, you may want to test the RSI trading system to see if it fits you as a trader.
How do we determine what direction our trend is? We can simply look at our moving average. We will be using the 20 SMA as our trading action zone:.
Another option would be to exit with whatever profit you have when the opposite trading signal is given which is when a buy signal is given-this can bag you hundreds of pips easily in a nice trending market. Like many robust trading strategies, you can be both long or short the market. Here is how to setup and manage a buying opportunity.
Buy using reversal candlestick patterns and price action that form when the price touches the 20 SMA line. Look for reversal candlesticks like:. Click this link for more information on reversal candlestick chart patterns.
Moving average can highlight trends and consolidation. Posted in Basic Swing Strategies. Forex Swing Trading Strategy 3: Powered by WordPress Designed by:More...