Profitable and exceptionally accurate scalping forex strategy using RSI (relative strength index) forex oscillator as entry timing tool. Suggested use is very uncommon and its coupled with signal candle that ensures statistically better entry that reduces costs of scalping tremendously.
Strategy can be used on all major currency pairs with spread around 0,5 pip.
Moving averages are used as a simple method of trend identification (this is a trend following strategy). Entry signal (with RSI) does an excellent job filtering out possible entries into the position just before trend reversal, avoiding a lot of posible losers.
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Indicators used in forex strategy
RSI (Relative strength index) 7. Purpose: Dual effect. Filtering out the trend losing momentum. Timing the position entry.
EMA (exponential moving averages) periods 20 (green) and 60 (red). Purpose: Both indicators are used in tandem as standard trend identification method.
Fractals. Purpose: To visualize previous high/low as it will be used for stop loss placement.
Place all of the above indicators in the 5 minute chart of any major currency pair.
Forex strategy rules:
BUY:
EMA 20 (green) trending above EMA 60 (red). This will be interpreted as an uptrend in our current timeframe (5 minutes). While this situation lasts we will only take long trades.
RSI crossed 70 line (into overbought zone). We will enter the trade long on bullish candle close, placing stop loss below the low marked by the last closed bullish fractal.
Take profit: Distance between entry and stop loss is mirrored also for take profit. Strategy uses stop loss that equals take profit.
SELL:
EMA 20 (green) trending below EMA 60 (red). This will be interpreted as a downtrend in our current timeframe (5 minutes). While this situation lasts we will only take short trades.
RSI crossed 30 line (into oversold zone). We will enter the trade short on bearish candle close, placing stop loss above the high marked by the last closed bearish fractal.
Take profit: Distance between entry and stop loss is mirrored also for take profit. Strategy uses stop loss that equals take profit.
Notes: Do not avoid entering the trade on EMA crossover. EMA crossover together with RSI signal often times offers the best entry opportunity.
