Uptrend trading schools
I mentioned that most traders and investors improperly use the RSI to receive uptrend trading schools or sell signals.
Instead of using the indicator for entry signals, I use it more as a filter to keep me out of trades that are less likely to work. The previous article specified the new parameters that uptrend trading schools be used with the RSI. Uptrend trading schools use the Uptrend trading schools with those new parameters to help us determine whether we should enter a position or wait as price approaches uptrend trading schools and demand levels.
The RSI measures momentum in price movement. When we are moving in an uptrend, you would expect the momentum to be bullish and not become oversold at any time if the trend is to continue.
An oversold reading means the bears have grown stronger and may reverse the price trend or not allow price to move upwards freely. In an uptrend, we want to hold long positions as supply breaks and prices move to higher levels. If we see on pullbacks that the price fails to break 40 on the RSI, then you are still in a bullish trend and are likely to break the subsequent supply level. This suggests that the bullish trend is still intact.
The location of the RSI above 40 confirms that there is still a lot of bullish pressure and that demand is likely to produce a significant price move upward and exceed the prior high.
In a downtrend, we want to let our shorts go as far as possible to maximize profits. Prices should not become overbought on the RSI while in a downtrend. Strong uptrend trading schools pressure signals the downtrend is not as powerful as it was. When we see rallies in the bearish trend fail to breach the 60 level on the RSI, then uptrend trading schools bearish momentum and downtrend is still strong and we are likely to see prices continue to break demand levels.
If we see the RSI moving above 60 when price hits supply, we may want to look for another trade or have shorter targets as price is unlikely to make new lows if it does bounce from supply. To remember the use of the RSI, I have come up with a saying: And if at supply and the RSI is above 60, then supply is a lie. Remember that RSI, as with any technical indicator, is to be used as an odds enhancer. Educated traders know that the decision to buy or sell should be made from the price action itself and the use of the core strategy of Supply and Demand.
To learn this valuable skill, visit your local Online Trading Academy center today! Disclaimer This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk.
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