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Price testing RSI forex strategy

One of the best ways to identify trend, is to use RSI forex indicator. Added benefit is, that we can easily adjust indicators sensitivity to distinguish between the trend and the range. This forex strategy also employs strength test formation to find a suitable entry with amazing risk reward ratio.

Price testing RSI forex strategy

Used forex indicators

RSI (relative strength index) period 21, lines adjusted: 70 to 55, 30 to 45

Formations: test candle formation

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Forex strategy rules

Testing while the price is trending signalizes that market makers are trying to estimate crowd involvement in trend continuation. Strength response to testing signalizes trends health, while failure to respond to test with dtregth signalizes likely trend reversal. This candle formation is clearly visible on chart immediately after its completion.

We will be looking only for strength response.

Timeframe 15 min.

Buy:

Price testing RSI forex strategy

RSI is trending above 55 line.

Signal: Bearish candle with extremely tall bottom wick (at least double the size of body + upper wick).

This candle is followed by strong bullish candle, clearly closing above its high.

We enter the trade long on bullish candle close, placing stop loss just below the low of the formation.

Exit: Once the profit reaches distance equal to stop loss – we move SL to breakeven.

Take profit: RSI closes above 45 line.

Sell:

Price testing RSI forex strategy

RSI trending below 45 line.

Signal: Bullish candle with extremely tall upper wick (at least double the size of body + bottom wick).

This candle is followed by strong bearish candle, clearly closing below its low.

We enter the trade short on bearish candle close, placing stop loss just above the high of the formation.

Exit: Once the profit reaches distance equal to stop loss – move SL to breakeven.

Take profit: RSI closes below 55 line.

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“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

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