EFFECTIVE RSI IS AN INDICATOR OVER BUY - TOO SELLING INDICATOR

Add RSI to the Daily chart and set the parameter to 9. For Daily, the price goes a bit slow, so leave 9, instead of leaving it to 14 as the default.

We will have 3 lines: 30, 50 and 70.

A market is considered overbought when the RSI is above 70, or slightly above 50 and below 70 (shaded green area).

Or the market is considered oversold when the RSI is below 30 or below 50 and slightly above 30 (bold red area).

WHAT IS THIS FOR?

It is a good confirmation of our entry points. Most of us are often in a hurry, the signal is to enter right away without waiting for a confirmation signal, the more confirmation signals you will be sure.

However, if there are too many confirmation signals, the price will be gone, the opportunity will be gone. Consequently, enough concept is something it is approximate and depends on the trader himself. Experience and skills are highly valued for the same reason.

The overbought and oversold zones will give you one more confirmation signal. And with the price movement, + Bollinger Bands candlestick pattern, we have real strength.

We will use these overbought levels to measure whether the force of price increases/decreases is so strong, will we go all out, will there be any more increases/decreases?

The RSI overbought and oversold zones will play that role.

Specifically, when the RSI rises above 70, the market is overbought, or in other words, the possibility that the buying power is almost over, the price rises hot and the possibility of a correction is quite high.

When the RSI falls beyond 30, the market is oversold, or in other words, the selling force is almost gone, the price drops a lot and the possibility of recovery is quite high.

We wait for a bullish signal, but if the price rises too much leading to the RSI overbought, then that setup you should be careful, or maybe not enter the order.

For example, in the figure, three candles 1,2,3 all meet the condition of the Double Bollinger Bands direction. However, you continue to watch the RSI, see that tree 3 is the entry tree, the RSI is still up and below 70, showing that the uptrend is stable and has not gone all the way. This setup is pretty good. If in this case, the RSI jumps to 80 or even 90, then it is advisable you not to enter anymore because it is likely to be reversed.

This time it is with H4 frame USDJPY pair

The h4 frame as well as the Daily frame, you also apply the same technique, the signal is very nice, the 3rd candle looks very hot, if there is no RSI, we would think the 3 increased All the power, how can I increase it anymore

But looking at the RSI, it can be seen that the market has not fallen into a state of overbought, the price has not increased too hot, the upward force is likely to continue. And that is the best filter for our Double Bollinger Bands system.

Of course, the above is just a combination of RSI and Bollinger Bands.

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