We can say that RSI (Relative Strength Index) Forex indicator most commonly used indicator based on pre specified rules and scientific formulas. It similar to other scalper indicator due to its ability to predict overbought and oversold levels.
RSI (Relative Strength Index) Forex indicator for MT4:
Working on predetermine scale 0-100. Also work as momentum indicator by predicting price change wherever price moves in various directions according to market trend. Formula of RSI is as:
- RSI = 100 – [100/ (1 + RS)]
- RSI Settings: 14 value Default Setting
8 or 9 value Short Term Trading
21 or 50 value Long Term Trading
Selling and buying:
Buy crossover signal: At lowest price level below 30 indicate the oversold price this is strong buying signal. A highest upward trend of price level indicate oversold RSI is about to start. All these are signals to enter a buy trade in RSI oversold. At RSI level 50 stop loss but at the level of 70 traders can gain an attractive profit
Take profit and stop loss: it can be close at two time firstly when the trade reaches the RSI level 50 and second when the price reaches the RSI level 70. Unfortunately, it should be done as soon as price uncertainty hit RSI level 50. place below the low lowest of upward price trend or reversed pattern will help to stop loss.
Sell crossover signal: At highest price level above 70 indicate the overbought price this is strong selling signal. A highest downward trend of price level indicate overbought RSI is about to start. All these are signals to enter a sell trade in RSI overbought. At RSI level 50 stop loss but at the level of 30 traders can gain an attractive profit.
Take profit and stop loss: it can be close at two time firstly when the trade reaches the RSI level 50 and second when the price reaches the RSI level 30. place above the high highest of downward ward price trend pattern will help to stop loss.
Features of Relative Strength Index indicator for MT4:
Platform are: MT4, MT5
Use charted graph for presentation and different colour line (any colour)
Work for any pair of currency. (EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, NZD/USD, EUR/GBP, GBP/JPY etc.
Uses of Relative Strength Index indicator for MT4:
RSI mostly used as leader indicator used to detect change in price trend it is far informative when it comes to detect over sold and over bought for a relative price in fluctuating market. It also indicates strong overbought and oversold signals.
Drawbacks of Relative Strength Index indicator for MT4:
RSI is one of best indicator but when it comes to timing in my thinking is its major lack most of trader attach another indicator to compensate this lack. Nearly all the signal that are generate by RSI are correct but sone initial signal are maybe false and sometimes it become hard to understand signals. It is high risky for new trades because true and false signal can be difficult distinct.