Occasionally new uses for old things can benefit us or they become new and improved. RSI, the Relative Strength Index is one of those things when it comes to Forex trading. Until recently RSI has been used to determine if prices are overbought or oversold. In fact, many traders still use it that way; even experts. However, RSI it has been shown is not a good indicator of overbought and oversold. Traders who use it to tell them when prices are too high or too low are kidding themselves. No indicator can do that.
Secondly, RSI has always been one of the main indicators to locate divergences in price and momentum. Although this is an algorithmic signal, traders misunderstand why and when it forms.
The New Concept of RSI Signals
The first and most important New Concept for RSI is that there are just 4 signals that the trader needs to be aware of. They are bearish and bullish divergences and bearish and bullish reversals. These signals can be located manually on any RSI chart or they can be located automatically on The RSI Paint Indicator, an indicator specifically designed to find all divergences and reversals. Reversals signals lead to significant profits trading Forex whether you are a scalper, short-term trader or long-term trader.
See any chart and know how to read it
Many traders, in particular new traders, look at charts and begin drawing trend lines. Why? Because they have been taught to do it by books, seminars, and web sites. Without going into it, this is wrong. Trend…