37# Dynamic Zone RSI Strategy Trading System
Submit by JanusTrader
We have been unable to track the origonal author of this indicator.
It has been enhanced by adding a user defineable moving average
Trigger Line. The indicator is particularly suited for lower timeframe intraday
trading and uses 3 Cross Verification techniques within the same indicator
1. Bollinger Band's – volatility analysis
2. RSI Analysis -Momentun
3. MA Trigger – user preference – signals rising momentum
Trade Setup Signals
For lower timeframe short term momentum trading Alerts
Initial Trigger “alert” as RSI moves above Moving Average Trigger Line
Failure to touch outer edge of Bollinger Band on swing Low/High (possible
Divergence, not shown in the example below)
Rising RSI above 50 level for long, below 50 Level for short trade
Bollinger Band Centre Line Support
Fibonacci Retrace support (where Possible)
In the example given below we have a classic short term momentum setup as all
our alerts come into play. Using the Fibonacci grid as our 4th cross
verification entry tool this can also be used as ourinitial stop loss method as
Entry may be taken in accordance with the traders personal risk profile and
trade plan, a reasonable risk level is able to be achieved with the use of “cross
verifications” in the traders trade plan, a minimum of 4 cross verifications
should be used to enhance success potential.
Intial stop loss: Possibilities would be a close below the fib retrace at .618,
.786 (not shown) or 100%. Alternative methods normally used by the
trader should also be tested
Trade Management; allow profits to run as RSI pushes through the Bollinger
band outer lines and the trade is managed by monitoring in real time the
relationship between rising price and RSI postion to Bollinger Bands, a closer of
the relationship between the Bollinger Bands and price does not necessary mean
that the momentum has completely stopped, often a breather is taken and the
expansion will continue. Take profits according to your trading risk profile or
use an entry as described below.
Exit:Conditons for exit of the trade can be as follows
• Profit targets met
• Double top in both RSI (second top inside BB's) and price action
• Candlestick formation
• RSI closes below the MA trigger Line for long trade, above for short
• Any othe conditions normally used by the trader to exit
The example given is an indication of the potential to develop various trade
plans from using this indicator and users must verify the signals and setups to
there own satisfaction prior to use in the markets. Trading Forex financial
markets is a highly risky business and traders trade at there own risk.
NO warranty or gaurantee is given or implied in this example.
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