As for the competence in forex trading, being professional in one to two
techniques is better than being a Jack of all trades, and protecting
yourself from unprofitable signals is superior to finding trading
signals everywhere. Therefore, WikiFX has summarized signals leading you
to failure herein for your reference!To get more news about
RSI, you can visit wikifx.com official website.
Reversal signals of RSI
Many traders prefer to use the relative strength index (RSI) for
operating reversed transactions as it is relatively simple. They believe
that RSI will see trend reversals instantly when it reaches the peak or
the trough. This is true under the context of horizontal price movement
or resistance/support levels whereas RSI cannot display the price
momentum immediately in face of a trending market or breaking news as
its signals are most reliable when they conform to the long-term trend.
As such, adding positions all the time will trigger hefty losses!
Reversal signals of hanging man candles and inverted hammer candles
When trading is based on reversal signals, including hanging man
candles and inverted hammer candles, traders should wait for the
horizontal price movement to choose appropriate levels for entry instead
of trading against the trend.
Insider bar with shadow
If the insider bar forms at the resistance level, the overlong lower
shadow should be avoided, which is indicative of the existing upward
momentum. Similarly, the insider bar formed at the support level should
avoid the upper shadow being too long.
Bollinger Bands lying close together
Traders are well recommended to stop trading under this circumstance
that is an indication of a deadlock between long positions and short
ones, or the reduction of trading volumes, which may be followed by
changes in the price action. Please wait and see or find more lucrative
markets to trade.
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