Forex Strategies Resources

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

explained below.

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

trade

• 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.

trading dynamic zone
Trading System
dynamic zone rsi.rar
compressed file archive [687 Bytes]
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RSI Forex Strategies