Rsi Channel with Moving Average is Momentum Trading system which try to catch the Fast and impulsive move in price action. This System consists of the Relative Strength Index along with high low bands and moving average.
Rsi Channel with MA Overview
Relative Strength Index is Momentum Oscillator which is calculated by taking Average gain and average loss of the past price movement. If Rsi is above 50 it means that the average gain of last 14 periods is move than the average loss of last 14 periods. It simply means that price is in grip of bulls. IF Rsi is below 50, that means the average loss of last 14 periods is more than the average loss of last 14 periods. It means that the bears are dominating the market.
Rsi Channel with MA Explanation
Traders should buy only when Rsi is above 50 and sell only when rsi is below 50.
10/20 bar High low indicator is applied on rsi to see where rsi is moving as compare to 50 bar low of 50 bar high. If price gives a breakout of these high low bands then traders can expect a major movement in price in the direction of breakout.
Moving average is used as confirmation tool to enter into new trade and also for trade management. If price is trading above the moving average then traders should look for buy trades and if price is trading below the moving average then traders should look for sell trades only.
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Rsi Channel with MA : Buy conditions
- Price Should Trade above the Moving average.
- Rsi should be above the 50 level.
- Rsi should give breakout from the upper band.
- Traders can hold the trade till the time price continues to trade above the moving Average.
Rsi Channel with MA : Sell Conditions
- Price Should Trade below the Moving average.
- Rsi should be below the 50 level.
- Rsi should give breakdown from the lower band.
- Traders can hold the trade till the time price continues to trade below the moving Average.