As the name suggests Fan RSI Indicator is based on a momentum Oscillator Relative Strength Index. This indicator is created by plotting multiple RSI on the same chart.
Fan Rise Indicator helps in identifying the change in trend at the early stage and allows traders to trade the first pullback of new trends. Let’s try to understand the working of this indicator with some examples.
Fan RSI Indicator Overview
Fan RSI indicator is created by plotting shorter period rsi, mid-period rsi, and longer period rsi on the same panel. When price moves strongly in any direction then a shorter period rsi moves faster because it only considers price over a short period of time and is thus more reactive to the price change.
On the other hand, longer period rsi is slower as it considers the price over a longer period and is more lethargic. Hence when price moves strongly in one direction this indicator forms Fan like formation which indicates the strength in the trend.
Fan RSI Indicator Explanation
Relative Strength Index is a banded oscillator, so the value of Rsi can’t go above 100 and below 0.level 70 is used as overbought level and 30 is used as an oversold level.
When the price makes a new high but the structure of Fan becomes smaller as compared to the previous structure then it’s an indication that the uptrend is losing its strength.
Traders should look for short trades in this kind of market. When the price makes a new high but the structure of Fan becomes smaller as compared to the previous structure, then it’s an indication that the downtrend losing its strength. Traders should look for long trades in this type of market conditions
Also Read: FX pullback Reversals Indicator
Fan RSI: Buy Conditions
- Price forming lower lows and lower highs structure.
- Structure of Fan becomes smaller on every new low.
- Traders should take buy trade on the breakout of the price structure.
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Fan RSI: Sell Conditions
- Price forming higher high and higher low structure.
- Structure of Fan becomes smaller on every new high.
- Traders should take sell trade on the breakout of the price structure.