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.

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
Oil - US Crude
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
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.11% France 40: 0.07% US 500: -0.18% Wall Street: -0.21% FTSE 100: -0.31% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/BYsOrQ3vtn
  • Crude Oil Prices Struggle Even as Powell Highlights Strong Recovery https://www.dailyfx.com/forex/market_alert/2021/04/12/Crude-Oil-Prices-Steady-as-Powell-Highlights-a-Strong-Recovery.html https://t.co/r8i6QncAeH
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/M5ByVTQRO5
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/pOqRcsvRuG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.97%, while traders in France 40 are at opposite extremes with 81.69%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/0sDY8wMAgW
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.11% 🇳🇿NZD: -0.02% 🇪🇺EUR: -0.08% 🇦🇺AUD: -0.15% 🇨🇭CHF: -0.16% 🇨🇦CAD: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/7VqFugM1Ph
  • Gold Prices Fall as Strong PPI Readings Boost Yields, USD Rises https://www.dailyfx.com/forex/market_alert/2021/04/12/Gold-Prices-Fall-as-Strong-PPI-Readings-Boost-Yields-USD-Rises-.html https://t.co/mSIBb6aELR
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: France 40: -0.02% Germany 30: -0.16% Wall Street: -0.27% US 500: -0.28% FTSE 100: -0.36% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/uBj1IaEu4W
  • Wall Street Futures Update: Dow Jones (-0.27%) S&P 500 (-0.28%) Nasdaq 100 (-0.27%) [delayed] -BBG
  • (#ASEAN Fundy) US Dollar Outlook: Bond Yields, Powell and CPI in Focus. USD/SGD Eyeing MAS, Chinese GDP #USD #Bonds #Fed #China #MAS $USDSGD https://www.dailyfx.com/forex/fundamental/article/special_report/2021/04/12/US-Dollar-Outlook-Bond-Yields-Powell-and-CPI-in-Focus-USDSGD-Eyeing-MAS-Chinese-GDP.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/5PYoYUgggs
RSI Tactics For Forex Trends

RSI Tactics For Forex Trends

Walker England, Forex Trading Instructor

Talking Points:

  • RSI is a momentum oscillator that can help pinpoint market trends
  • RSI can stay overbought for extended periods in an uptrend
  • Indicator divergence can signal changes in momentum as well as entry signals

RSI is a momentum oscillator that has become a staple for technicians across markets. While most traders may know how to read RSI, there are some tactics that can be employed for trending markets. Today we will continue our look at indicators by reviewing RSI divergence in trending market. Let’s get started!

RSI and the Trend

Normally when traders first use RSI they immediately gravitate to trading every overbought or oversold crossover the indicator offers. While there are merits to considering a crossover based strategy, it is important to help filter these signals with the trend. Using the example below, we can see the EURUSD currency pair trending towards higher highs. At the same time, by the design of the indicator, RSI can remain overbought for an extended duration as price continues higher.

Knowing this, traders should avoid RSI signals to sell as prices continue upward towards higher highs. So how can traders use RSI in a strong trending market?

RSI Tactics For Forex Trends

Positive RSI Divergence

RSI divergence is a great tool for trend traders to use to help filter RSI entry signals. The word divergence implies that we are looking at price separating from our indicator. This can easily be identified on the chart by identifying two points to begin on our graph. In an uptrend, if price is retracing and moving towards a lower low but RSI is forming a higher low this can be used to trigger fresh buy orders. The idea is to buy when momentum is returning to the market. As RSI moves higher it can pinpoint just that.

Below we have an example of positive divergence and RSI at work. There are two potential entries highlighted below. The first uses a traditional RSI crossover for entry. If stops are placed below a swing low, traders would have been exited for a loss on this position. From this point, as the market continues toward a lower low, RSI begins to form a higher low. This is a strong signal that momentum is returning in the direction of the trend. Traders then have the ability to trade the next RSI signal and enter the market upon the trends continuation.

RSI Tactics For Forex Trends

Trading a RSI Strategy

As you can see RSI and positive divergence can be great tools for trading trending markets! Now that you are more familiar with one of the many uses for RSI, you can begin working with the indicator in your trading. To continue learning more about RSI, which includes a full strategy for RSI divergence, sign up for the FREE DailyFX RSI course through Brainshark using the link below.

Register me for the “Trading with RSI, Strategy Course”

(Valid name, email, phone number, and country are needed)

---Written by Walker England, Trading Instructor

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

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information

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

DISCLOSURES