𝗛𝗼𝘄 𝘁𝗼 𝗧𝗿𝗮𝗱𝗲 𝘄𝗶𝘁𝗵 𝗥𝗦𝗜 𝗜𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿
Key RSI Levels:
70 and above = Overbought (price may reverse down)
30 and below = Oversold (price may reverse up)
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Basic Trade Setup Example:
1. Buy (Long) Trade:
Entry: When RSI drops below 30 and then crosses back above 30.
Stop Loss (SL): Place it a few pips below the recent swing low.
Take Profit (TP):
TP1 at the nearest resistance level.
TP2 when RSI reaches around 50–60.
Or you can trail your stop once RSI crosses 50.
Example:
RSI drops to 25
It comes back and crosses 30 upwards
You open a buy trade
SL below recent low
TP near resistance or when RSI reaches 60–70.
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2. Sell (Short) Trade:
Entry: When RSI goes above 70 and then crosses back below 70.
Stop Loss (SL): A few pips above the recent swing high.
Take Profit (TP):
TP1 at nearest support level.
TP2 when RSI falls to around 50–40.
Or trail your stop as RSI falls.
Example:
RSI reaches 75
Comes back and crosses 70 downwards
You open a sell trade
SL above recent high
TP at support or when RSI hits 40.
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Tips for RSI Trading:
Use with trend confirmation: In an uptrend, avoid short trades; in a downtrend, avoid long trades.
Combine with price action: Look for candlestick patterns near RSI levels.
Divergence signals: When price makes a new high but RSI makes a lower high (or vice versa), it’s a sign of a possible reversal.
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