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Combining the RSI with a Bullish Engulfing Candle

Combining the RSI with a Bullish Engulfing Candle

Richard Krivo, Trading Instructor

Student’s Question:Would you agree that this is an example of how RSI supported by a Candlestick pattern can influence your entry?Instructor’s Response:Yes…and nicely identified.

Even though this is a trade that has been taken against the Daily trend on this historical chart of the USDJPY, your example is sound.

The bullish engulfing candle combined with the RSI moving above 30 would be a higher probability entry into a long position. Confirmational indicators such as these can increase the confidence level of a trader when taking a position.

Conversely, to trade in the direction of the Daily trend, one could wait until the RSI is above 70 and then look for a bearish engulfing candle to close with the RSI closing below 70.

Combining_the_RSI_with_a_Bullish_Engulfing_Candle_body_post-day-chart-3-5-09.png, Combining the RSI with a Bullish Engulfing Candle

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