If you are reading this you are interested in making money in Forex. It would take a book to cover all of that and I have written three. However, my goal here is to tell you how New Concepts in RSI and in Momentum can put you on to the road to success much earlier.
What is RSI?
RSI is an acronym for the Relative Strength Index. The Relative Strength Index was designed to measure momentum in the market. It does this very well however, the old original concept for which it was developed, that of overbought and oversold, is incorrect. What has emerged however, are New Concepts in RSI that allow it to be used as a standalone trading system.
New Concepts in RSI
The first New Concept in RSI is that of the 4 RSI trading signals which are clues to how the market is moving. Bullish and bearish divergences are most often a signal or clue that the market is in retracement mode. In the past, divergences were thought to indicate a reversal. In most cases this is wrong and can lead to poor entries in the market. Go to most any website today and you will get the wrong information however. You will learn that RSI measures overbought and oversold and that divergences lead to reversals. This is incorrect.
The second key concept in RSI is that divergences and reversals set traders up to be in position to trade Momentum 3.
First Momentum 1 and 2
RSI charts not only can be used to locate divergences and reversals (it can be done automatically using an indicator…