2-Period RSI Trading Examples Winning Trade – RSI Oversold The first one to show us the trend, and the next one to show us trade. Buy on break of the low of a bearish bar.Price breaks below the lower swing low that formed just before the RSI signal (confirmation of bear trend).Buy on break of the high of a bullish bar.Price breaks above the higher swing high that formed just before the RSI signal (confirmation of bull trend).So, when an overbought 2-period RSI actually succeeds in pushing the market down, we know that a downtrend has begun.Īpply the same logic to oversold RSI signals in bear trends to alert us to the beginning of bull trends. Of course, most of these overbought signals will fail because the 2-period RSI is not meant for locating significant reversals. We expect the 2-period RSI will give many overbought signals during an uptrend. The 2-period RSI (like the 2-period ADX) is extremely sensitive. I always enjoy putting less on my charts. Let’s do away with a separate trend indicator, and let the 2-period RSI clue us in on the trend. However, I added a twist to this fast oscillator. Trading Rules – 2-Period RSI StrategyĬoupling an oscillator with a trend indicator is the usual approach.įor instance, Connors recommended the 200-period moving average, and did just that in their RSI2 examples. What is so fantastic about the 2-period Relative Strength Index (RSI) that a well-regarded trader like Larry Connors would suggest it as “the one” indicator? Together with Linda Raschke, he wrote the book, Street Smarts, which is a solid collection of trading strategies including the Holy Grail. Larry Connors is an experienced trader and publisher of trading research. Larry Connors in How Markets Really Work “Even though we do not suggest using only one indicator, if one had to, the 2-period RSI would be the indicator.”
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