News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The British Pound gained aggressively, placing the focus on levels that may send GBP/USD and GBP/JPY lower, with EUR/GBP still open to a turn higher. Will Sterling’s advance continue? Get your $GBP market update from @ddubrovskyFX here:https://t.co/PHoCHVc20M https://t.co/NKKwqiEESG
  • RT @FxWestwater: #Corn had quite the day, with a big limit-down drop after the USDA #WASDE report forecasted higher ending stocks. https://…
  • Japan plans virus emergency in Hokkaido, Hiroshima and Okayama -BBG
  • The Dow Jones and S&P 500 outlook appears bleak in the near term as retail traders increase their upside exposure. At the same time, these indices confirmed bearish technical warning signs. Get your market update from @ddubrovskyFX here:https://t.co/fKCHELbOxo https://t.co/9C6i6IHqCr
  • USD/CHF May Reverse Downtrend if Falling Wedge Plays Out - #USDCHF chart https://t.co/6VXrYbCodi
  • The Euro's technical posture against the US Dollar, Japanese Yen and Australian Dollar shows potential for near-term directional shifts. Here are the EUR/USD, EUR/AUD and EUR/JPY levels to watch. Get your $EUR market update from @FxWestwater here:https://t.co/7rW8FGPBUt https://t.co/Lu6KAC3YzQ
  • #Dogecoin up over 13% as Elon Musk tweets he is working with #Doge devs to improve system transaction efficiency, adding it is 'potentially promising' This is a day after #Tesla suspended Bitcoin payments for vehicle purchases, courtesy of @FxWestwater - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/05/12/Bitcoin-BTC-Plunges-on-Tesla-Bitcoin-Suspension-AUDUSD-Spars-USD-Strength.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/NlPFPbGGSL
  • RT @Yeap_IG: Historical 10-2 #Treasury spread after each recession may suggest further room for upside for 10-year #yield from current leve…
  • 10 out of 11 S&P 500 sectors ended higher, with 88.1% of the index’s constituents closing in the green. Industrials (+1.90%), financials (+1.87%) and utilities (+1.79%) were among the best performers, whereas energy (-1.35%) trailed behind. https://t.co/HUPMnYAEsL
  • US Dollar Outlook: DXY Index Eyes Retail Sales Data, Yields -via @DailyFX Link to Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2021/05/13/us-dollar-outlook-dxy-index-eyes-retail-sales-data-yields.html $USD #Forex #Trading https://t.co/10Hb8pYSp1
RSI: Triggering Trades in Oscillating Markets

RSI: Triggering Trades in Oscillating Markets

Walker England, Trading Instructor,

The RSI (Relative Strength Index) indicator is a common momentum oscillator used to identify changes in price movement. Developed in the 1970s by J. Welles Wilder, RSI is an extremely useful tool when used in conjuncture with a strong market trend. Ultimately, this indicator can assist us in determining, overbought / oversold levels when price pulls back against the trend for fresh entries.

For today’s example we will be looking at one of the markets strongest trends. Depicted below on the 8Hr chart we can see the EURGBP pair declining as much as 1312 Pips over the last 12 months. So how can RSI help us enter trades in a directional market?

RSI_Triggering_Trades_in_Oscillating_Markets_body_Picture_3.png, RSI: Triggering Trades in Oscillating Markets

Before we contemplate placing any trades, first we need to understand exactly how to translate RSI. The indicator itself is defaulted to a standard setting of 14 periods and oscillates by comparing the average gains vs. the average losses of an asset. This creates conditions where price is either considered overbought at a reading over 70, or oversold under a value of 30. Price will drive RSI to these levels on a move against the trend, and signals a point where traders may look to rejoin long term momentum.

In a downward trending market like the EURGBP, it is important to only focus on overbought levels. As RSI moves over 70 as depicted below, traders will begin looking for price to pull back and create lower lows. It’s important to note that execution should only occur once the RSI indicator moves back below our overbought value of 70. This is known as a failure swing and can be used as a signal to trigger fresh sell entries in the direction of the trend.

RSI_Triggering_Trades_in_Oscillating_Markets_body_Picture_2.png, RSI: Triggering Trades in Oscillating Markets

Zooming back out on our 8Hr chart we can see there were exactly 3 entry signals using RSI failure swings on the EURGBP, over the last trading year. While this may not seem like many trades, we can clearly see how RSI is useful in timing entries trending markets. Traders looking for more signals may always opt to use a smaller period chart. However, if this is the case note that we should always identify the trend. RSI and overbought levels should be reserved for selling opportunities in a downtrend and oversold levels used strictly to buy in an uptrend.

RSI_Triggering_Trades_in_Oscillating_Markets_body_Picture_1.png, RSI: Triggering Trades in Oscillating Markets

---Written by Walker England, Trading Instructor

To contact Walker, emailinstructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to instructor@dailyfx.com

DailyFX providesforex newson the economic reports and political events that influence the currency market. Learncurrency tradingwith a free practice account and charts from FXCM.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES