today I'm going to show you a Forex RSIindicator strategy that actually can be used for stocks and futures and eminis aswell not just for options but we're going to use Forex examples today and it is oneof the best RSI trading strategies that I've seen you can use it
for day tradingand it's a little bit advanced I would say maybe intermediate and we're notgoing to be using divergences so much like a lot of people teach and I'll showyou why in a minute so the RSI is a momentum indicator justlike the stochastic indicator MACD indicator these are
all momentumindicators that's the first thing to understand so when we talk about itwe're talking about strength momentum think of a train going down the trackhas a lot of momentum so when you think of that energy of momentum understandthat we're looking for a sustained energy it's very hard for
a train to godown the track and just stop on a dime right even if you apply the brake gonnakeep going so that's the type of thing that we really should be looking forhere with the RSI indicator so the strategy is this so let me bring upfirst my indicator
so I'll show you how I have it set they always get thisquestion as well I should so it's very simple the way I have it set is 14periods that's pretty common this particular indicator has a movingaverage connected to it I took that off well I just made it
one so it doesn'tshow up and then they set the RSI to red that doesn't really matter but anywayokay oh and then the other two things upper and lower where's an alliance over30 and 70 again pretty standard but I've seen people use different differentparameters there so those are ones
that we're using for today's purpose alreadyso now here is the concept the concept is this that as long as the indicatorred line here is between 30 and 70 we're not seeing any super strong momentum ineither direction alright so there's some there's some but we want a lot for
thisparticular strategy so we're gonna look for the very firsttime notice this whole time here that the indicators stay between 3d and 70 sothe first time is the key the first time that it hits in this case 70 that'sshowing a lot of strength to the upside so now that
train is going very veryfast north and we got a lot of momentum now look what happens again you don'twant to trade an indicator by itself an indicator is well what does an indicatordo it does what it promises it indicates okay so it doesn't tell it's not afortune-teller it's
not a crystal ball but it is a mathematical formula andthat math is meaningful and in this case we've already discussed what that ismomentum so then we look for other things we say okay well what's going onwhen we hit that strength level that's bullish strength see a lot of
peopleinterpret this as overbought overbought and that is not normally the best way toread this the first time it comes into here an operative word first then we arefinding a very initial movement of strength now we got a resistance levelover here and we break above it so that's very
key then we come back andI've got a 20-period moving average here that's what this black line is 20 periodII know this is the yeah 20 period EMA so mmm the key is we hit that strengthhere so the indication is that there's strength to the upside and we want
to dois say okay why are we doing with price levels up we broke above it confirms thestrength we retrace back to it and we retreat retraced back to the 20EMA in this case used your favorite moving average if you want to and so wehave a cluster of support
and therefore and we're in ace we've had our firststrong impulse move up and therefore that's where I would get in looking forthe train to continue to go up that momentum to continue alrightso early why do we say the first time to themiss named overbought line I say that
because we want to get in as early aspossible into a new indication professional traders are always gettingin early amateur traders are always getting in late so you take the firstsignal now sometimes these signals will continue very long a long time othertimes not so much so that's where your
money management and risk managementcomes in in this case yep pretty dang good we'll get that thing just go to themoon so pretty awesome all right now let's look for a next signal now there'sa next one okay boom again so this is the first time after a long time
of theRSI being between 30 and 70 here and this is the first time boom it hits 70again so momentum up for the first time for a long time strength up again notoverbought oversold see some people will teach that's overbought and you shouldgo short mmm that's napped and it's
now I would trade this so as we go forwardthen again what do we got we got ourselves the first time it hits thereboom we get above the previous high so for prey structure retrace back to themoving average in and we go so you could really break this down
into three stepsright step one look for the first time it hits the upper line there I don'twant to call it the overbought line but the upper line at 70 that's step onestep two do we break a previous price high step three wait for a retrace backinto our moving
average and also we can extend this price high over here we wantthat kind of cluster I would say this again you can use different movingaverages you can use your favorite but I like to see it the key to me is I liketo see it hold this I'll bring
this across here like this and and hold thatprevious high so it's a break and retrace to it so that resistance becomessupport as is commonly talked about all right so that's really the techniquestep one two and three three-step technique that you can use for this nowyou can use this
to the other side as well butyou know and I want to just show you this because this is very important allthat is nice and neat and tidy but top titrating here we insist on showing youall kinds of times when things don't go as perfectly so here we get
the firsttime that it goes down and hits the lower line at 30all right does it work out it does but it's not so neat and tidy because we'vealready broken out through this resistance level or support level wayback there right okay and do we return back to the movie
George not quite notquick don't quite make it so we don't get you know that perfect one-two-threesetup that we were talking about but it still works and this is what I want topoint out so we get our retrace this is what I would look for boom boom boomboom boom
we got a retrace now at this time youmight want to say okay we've stayed below the moving average we've got anice pin bar here for our candlestick and you can use that for your entry togo to go short all right so and then if you want to you
can evengo back here and say whoa wait a minute is there a support level that we havebroken and the answer is yes let's see so in this case we hit our momentumindication here which is bearish we broke through a support level that wehave to go all the way
back here now to find and we retrace to it so sometimesyou just have to be a little more a little more historical data because wehad such a strong down move here before we got the indicator signal okay but didprinciple still applies it's still there it's still there it's
just in this casewe had to go back there so you might have to when you get a big impulse movelike this then you might have to look back a little further to find thesupport level or resistance level let you broke it now I encourage you to havealso you
know some other things here that you're looking for but that's thestep one two and three you might want to combine with other things you're alreadyusing and then again don't treat just oneindicator left for prey structure make sure you got your risk management yourmoney management honed in that's very
very critical so if you liked the videoif you found it helpful feel free to let me know down in the comments if you haveany questions type them there also I have a complete trade strategy that I'dlike to give you absolutely free it's my rubber band trade and I
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