An Interest Use of the RSI indicator–RePost

This has to be the most read post on this blog, so I’m reposting it.

If anyone is interested in the coding for this indicator, you can contact me at:

bfamedia@live.com

Please be advised, its not free, it costs $39.

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To me RSI studies are the best to see what’s happening to trends, underneath all the noise. I like to use RSI studies on longer term charts, Dailys, 4HR, 1HR, no less. I just find it more accurate in those time frames.

We’ve played around with some TradesTation coding languge and have come up with a combo of the traditional RSI and Bollinger Band studies that we often use……………see below:

Click on the image to make it bigger.

Remember that what you are looking at is just one tool, and you should never rely on one study. You need other studies to confirm signals. The RSI indicator used here in this study has been somewhat customized

This particular twist on RSI and Bolli Bands gives signals as follows: (the thick BLUE line represents an RSI reading of 50)

To go Short you want the RSI (the white line) to cross below the green low Bolli band AND the green low Bolli band must have a value > 50 when this occurs………thats the only short signal we take from this study.

You can see that this study poduced a sellshort signal on July 23, 2008 for the EUR/USD. tHE CLOSING PRICE FOR THAT DAY WAS 1.5697

To go long you want RSI (the white line) to cross above the RED hi Bolli band line AND the RED Bollo band must have a value < 50

Like I said above this is a signle study and its data needs to be comfirmed by other studies, but is does at least give you an idea of when RSI,not price, is begining and new trend, and catching trends is one key to FX trading.