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
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
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
Bearish
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • For most of 2021, the US 10Y yield remained in an ascending channel. In recent sessions, yields have cooled thanks to a dovish Fed. Also of note, markets appear to be signaling that US outperformance is now fully priced in. https://t.co/QD7ctvXB6T
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: France 40: 0.40% Germany 30: 0.35% FTSE 100: 0.27% US 500: -0.01% Wall Street: -0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/TQst43wrMf
  • GBP: Gradual chopping decline since Feb smacks of corrective behavior. Bull-flag coming into view that could soon trigger. Get your $GBP market update from @PaulRobinsonFX here:https://t.co/ndjE4K0Nmk https://t.co/8dxgUTYH7V
  • #Bitcoin lower by more than 2.5% as Turkey bans crypto payments, citing risks #BTC $BTCUSD https://t.co/KFj1mJjBpp
  • US #Dollar Near-term Technical Setups: $USDCAD, $AUDUSD, $GBPUSD - https://t.co/39M4d62z9A https://t.co/d8pDosSpoV
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Gold: 0.82% Silver: 0.65% Oil - US Crude: -0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/KVfIXfvjtM
  • Gold breaks out of the range-bound price action from earlier this week as the 10-Year US Treasury yield slips to a fresh monthly low (1.53%). Get your $XAUUSD market update from @DavidJSong here:https://t.co/QlflNxQb8o https://t.co/cMYBlVaH5X
  • Bank of America sets bond sale at $15 billion, new record issuance for a bank - BBG $BAC
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.51%, while traders in Germany 30 are at opposite extremes with 80.34%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Rt3UaXS0iz
  • CI Global Asset Mgmt to launch world's first Ethereum ETF - BBG $ETH
RSI Confirmation For Breakouts

RSI Confirmation For Breakouts

Walker England, Forex Trading Instructor

Talking Points:

  • Technical indicators help decipher price action
  • RSI uses overbought and oversold values
  • Breakouts should match RSI extremes

Traders have options when it comes to trading. Normally some of the most important decisions made revolve around whether to enter into a trade or not. While some traders will aggressively jump into the market with entry or market orders, others may choose to trade more conservatively and wait for a confirmed trading signal. Today we will review the later, by learning how to use the RSI indicator to confirm market breakouts. Let’s get started!

What is RSI?

Before you place your first trade using RSI,it is important to become acquainted with what the indicator is telling us and why. RSI is a classic oscillator which means the indicator tracks price by moving or oscillating above or below a center line. As seen below, RSI oscillates higher and lower by tracking average gains versus average losses, ultimately causing it to move between the values of 0-100. When RSI reaches a value over 70, traders consider the indicator overbought. Conversely, a reading under 30 is considered oversold. Keep these values in mind as they will become important when it comes time to confirm breakouts.

If you are learning about RSI for the first time, or simply want more information to review the indicator, sign up for our FREE RSI training course using the link below. After registering through the guest book, you can continue to learn the basics of RSI using a series of videos. Then when you have completed the course, feel free to test your knowledge with the attached check point question.

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

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

RSI Confirmation For Breakouts

Confirming a Breakout with RSI

Once you are comfortable reading RSI, you can begin using the indicator to confirm breakouts. While traders normally look for RSI crossovers for trading signals, the exact opposite technique will be used in this example. If price is seen breaking through a key line of resistance, confirmation will occur when RSI moves into overbought territory at a value of 70. The idea is that if market momentum is up, RSI should be up too! The same is true if price is headed down, and breaking through a value of support. Traders can wait and confirm the move using RSI as it pushes below 30. Let’s look at an example.

Below we can see an example of a breakout that occurred last month on the GBPJPY. At that time current resistance was found at 180.00 for the pair. Price vigorously broke through this value on November 3rd. RSI at the same point can be seen becoming overbought. Breakout traders could take that as a sign of increasing bullish momentum confirming any new buy based breakout positions.

RSI Confirmation For Breakouts

Practice your Trading

Using RSI to confirm trading signals, is like any other trading skill and will take time and practice. To help you analyze the market using live charts, register for a FREE Demo account with FXCM. This way you can practice trading with RSI and other indicators while following the market in real time!

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

DISCLOSURES