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EUR/USD Breaking Below Upward Channel – ECB Under Spotlight! 

The EUR/USD currency pair erased some of its previous day gains and dropped below the 1.1400 level while represented 0.05% losses on the day. However, the modest losses in currency pair could be attributed to the broad-based U.S. dollar strength backed by the renewal of Sino-American tension, which kept the currency pair lower. The hopes that European Union leaders may agree on stimulus and deepen fiscal integration to protect the Eurozone economy from the coronavirus crisis helped the currency pair limit its more profound losses. 

At the moment, the EUR/USD currency pair is currently trading at 1.1406 and consolidating in the range between 1.1393 – 1.1421. However, the traders seemed cautious to place any strong position ahead of European Central Bank’s (ECB) rate decision, scheduled to happen on the day.

As we already mentioned, the European Central Bank’s (ECB) rate decision is scheduled to happen. So, some analysts widely expected that the European Central Bank will keep its policy unchanged as the impact of recent measures loosens, and the economic recovery pace remains uncertain.

However, the actual amount of the economic damage caused by the coronavirus outbreak in the second quarter would become apparent only at the end of the month with the first estimates for GDP growth. Thus, there is little reason for further action from the European Central Bank (ECB) at this moment.

As per the senior analysts, the coming European Central Bank meeting could leave a significant impact on the shared currency. Whereas, the member nations stand divided on the scale and composition of the stimulus package, with the richer northern nations like Germany and the Netherlands opposed taking the long-term step of polling debt with the fiscally-profligate Mediterranean governments. 

The shared currency recently benefitted as investors expect member nations to reach a compromise close to Germany and France’s proposal of a 750-billion euro fund, which will deliver 500 billion euros as grants and guarantees and 250 billion in loans.

At the US-China front, the US-China tussle took a breath earlier after U.S. President Donald Trump personally avoided imposing further sanctions against Chinese entities involved in enacting Hong Kong’s national security law while saying that he does not want to further escalate tensions with China. Despite this, the tensions remain on the cards as China is still threatening to retaliate because the U.S. imposed sanctions on diplomats from Beijing while signing an executive order ending preferential treatment for Hong Kong on Wednesday.

At the USD front, the broad-based U.S. dollar did not give any significant heed to the vaccine success and took bids on the day, possibly due to the worse situation of ever-increasing coronavirus numbers and an ongoing tussle between the US-China which exerted some downside pressure on the S&P 500 futures. However, the gains in the U.S. dollar kept the currency pair lower as the price of oil is inversely related to the U.S. dollar price. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.01% to 96.032 by 10:12 PM ET (3:12 AM GMT).

The market traders keep their eyes on the U.S. economic docket, which will show the release of Retail Sales m/m, Philly Fed Manufacturing Index, Unemployment Claims, and Business Inventories m/m, which could play a key role in influencing the intraday momentum. On the EUR side, all traders keenly awaiting the European Central Bank’s (ECB) rate decision, scheduled to happen on the day.

Daily Support and Resistance

S1 1.1297

S2 1.1358

S3 1.1385

Pivot Point 1.1419

R1 1.1446

R2 1.1479

R3 1.154

The EUR/USD is trading with bearish bias after posting a high near 1.1446 mark. Recently, the formation of candles beneath the 1.1446 mark is likely to extend bearishness until the 1.1370 level. While candles closing over 1.1370 can also trigger a bullish bias in the EUR/USD pair. Alternatively, the bearish breakout of 1.1370, the EUR/USD prices may slip further until 1.1305 level. Good luck! 

Introduction

Technical analysis is a major part of the trading without it most of the traders cannot think to trade the market, there are different types of indicators available in the market, but most of the indicators exist for one sole purpose, and that is to provide the trading signals. Some of the indicators are the leading one in the industry, and some are the lagging indicators; some provide the divergence; some gauge the momentum of the trend while other indicators follow the trend and provide the buy and sell signals. In this article, we will share with you the five most important technical trading indicators to add to your trading toolkit. You don’t need to use all of them; instead, pick the few of them that suits your trading style.

TRADING INDICATORS.

1. MACD – MACD stands for Moving Average Convergence and Divergence is a trend following indicator developed by Gerald Appel in the late seventies. MACD Is one of the simplest and most effective trading indicators. The MACD indicator is calculated by subtracting the 26-period exponential moving averages from the 12 period EMA. The result of this calculation is the MACD line. A nine-period EMA is then plotted on top of the MACD line, which gives the buy and sells signals. Traders buy the security when the MACD line crosses above its signal line and take sell when it closes below the signal line. The indicator also fluctuates above and below the zero line which indicates the buying and selling market. Traders can also look for the divergence, overbought and oversold level, and rapid rises and falls.

 

2. S.I. –RSI Stands for Relative strength index is a momentum indicator developed by the J. Welles Wilder. The indicator measures the speed and change of price movements, and as a result, it provides us overbought and oversold trading opportunities. The RSI Indicator has three major uses, the indicator moves between the zero to hundred level, and these levels helps to gauge the momentum and the strength of the trend. When the indicator moves above the 70 level, it is considered as an overbought level and soon expects the reversal. When it moves below the 30 level, it is considered an oversold level and expects a buy-side reversal. Some aggressive traders try to buy and sell the security when the prices approach these levels, and some conservative traders wait for the price action and indicator to show some signs of reversal, then they take the trade. The divergence is the second use of the indicator; divergence is when the price action is moving in one direction, and the indicator is moving in another direction; it is also a sign of the trend reversal. The third use is the indicator also provides the support and resistance level. In an uptrend, the security often holds above the 30 level, and most of the time, it reaches the 70 level, and in a downtrend, the security holds below the 70 level, and it often reaches the 30 level.

 

3. STOCHASTIC –Stochastic is a momentum indicator developed by George C. Lane in the late 1950s. Most of the traders think the stochastic is follows the price or volume, but it’s not true according to the Lane the indicator follows the speed or momentum of the price. As a rule, the momentum of the price action changes its direction before the trend changes direction, which makes the MACD as a leading indicator in the industry. The indicator is plotted between the 0 to 100 level, and it oscillates the 20 to 80 level. When the price action goes above the 80 level, it is an indication to go short, and when it goes to the level, it’s a sign to go long. In short, values above 80 considered overbought and values below 20 considered oversold. The bullish and bearish divergence is also useful to foreshadow the upcoming reversals.
4. AROON INDICATOR – Aroon is a technical indicator developed by the Tushar Chande in 1995. The indicator uses to identify the trend changes in an asset as well as the strength of the ongoing trend. The indicator also helps the traders to identify whether the market is trending or range-bound by using its two components, which are Aroon Up and Aroon Down. When the Aroon up crosses above the Aroon down, it is a sign of the possible trend change. When the Aroon up hits the 100 level, and Aroon down goes near to zero level it is a sign of the uptrend in progress. Conversely, If the Aroon down crosses above Aroon up and stays near 100, this is an indication of the downtrend.
5. KST INDICATOR – When It comes to day trading, the K.S.T. indicator is one of the best, which you can use to make quick bucks from the market. K.S.T. stands for Know Sure Thing is a momentum indicator developed by the Martin Pring. The indicator was first described in the 1992 magazine “Summed Rate of Change.” The indicator is used in the same way as the rest of the momentum indicator is in play. K.S.T. indicator moves above and below the zero level. The trading signal generated when the indicator crosses above and below the signal line. Traders look for the divergence, crossover, and both the lines above and below the zero level to trade the signals. When the indicator goes above the zero level it’s a sign of buying momentum, and when it goes below the zero level, the momentum is in the favors of the sellers. A positive reading indicates the trend is up, and the negative readings indicate the trend is down.

CONCLUSION.

The goal of every trader is to identify the trading signals and use it to trade the short or long term trends. There are hundreds of trading indicators available in the market, and the above five are the most popular A.K.A. celebrity indicators, which widely used by every type of traders in the market. Use these indicators in your everyday trading to trade the high probability trading opportunities.

 

Introduction

When you start in the trading game, you often heard people tell you to let your winners run and cut your losses immediately. Well, this piece of wisdom is true, but most of the traders failed to do so, and they end up in the losing side in the trading. As per the Wall Street report, nearly 95% of the traders in the market always end up in losing side; this is because they have a habit of booking their profits too early.

First of all, you must accept this fact that the market is random and it can do anything at any given situation, and the trading is a game of probabilities, there is no guarantee that your trade will end up in the winning side. If you genuinely desire to be in the top 5% of the traders, you must have big winners, and the smaller loses. This sound so simple, but in reality, it is so difficult. Remember when you are wrong in the market, you are not only in the losing trade, but you also have to pay commissions. So to be a winner in the game you must develop a healthy and abundant mindset which let you hold your trades for the more extended targets. Most of the traders end up closing their trade for no reason, and this is the number one mistake they made in their trading. From now on, you must promise yourself that you will only close your trade when the market gives you the valid reason to close it and if your purely closing the trade to book the profits, then simply you are missing tons of money in the market. In this article, we will share with you some tips and tricks on how to book your profits.

PROFIT TAKING STRATEGIES.

TREND LINES.

Every trader in the world desire to catch the trend, because that’s where the real money is. A strong trending condition helps you to reap the profits without much headache of the volatility effectively. So there are two ways to trade the trend, the first one is to by using any trading strategy enter in the direction of the trend and the second way is to let the price action pullback little bit and take the counter-trend trade to the most recent support and resistance area. In this way, by following the trend, you can catch the major moves, and by following the counter-trend, you can easily capture the minor moves also.

So by using any trading strategy you can enter in a trade, let’s say in trending conditions you use the trend line to take the buy entry, and when the price action breaks the trend line, it is an indication to close your trade.

The image below represents a couple of buying trades which we took when the prices hit the trend line, and the take profit was purely based on the trend line also. When the trend line failed to hold the price action, it means now the sellers are not strong enough and we can expect the reversal from here. What you need to do is to look for the break and closing below the trend line to close your buying trade.

CHANNEL PROFIT TAKING STRATEGY.

Here we are using the price channel to take an entry and exit in a trade. A price channel when the market is about to finish its trend, and in the channel, both of the parties hold equal power. So we are not going to take the buy-sell entry when the price action hits the channel. It’s a simple approach to trade the market. Instead, follow the market trend and only place the trade with the trend. For example, if the price action prints the buying trend channel then we only going to look for the buy trades and when the price action hits the upper line of the channel it is a sign to close our position.

The image below represents the buying entries and exits in the GBPCAD forex pair. As you can we first draw the price channel and every time prices hit the lower channel, it is a sign to go long, and every time when it hits the upper channel, it is a sign to book the profit. This is one of the easiest and simplest trading approach and keeps in mind the most straightforward approaches works best in the industry.

DIVERGENCE PROFIT TAKING STRATEGY.

Divergence trading is a quite popular and easy way to make entry and exit in a trade. Most of the oscillator shows the divergence on the price action, which is a sign to take trade or exit in a trade. Here we are going to use the divergence to close our trade. Divergence is when the price action going in one direction and the indicator goes in another direction. When they both move in the opposite direction, it means that the indicator does not agree with the price of an asset or we can say the prices are overextended and the correction is mandatory.

In this strategy, we are going to use the RSI indicator to identify the divergence on the price action.

RSI stands for RELATIVE STRENGTH INDEX, and it is an oscillator which moves above and below the 30 to 70 level. When the indicator goes to the 70 level, it means the market is overbought and soon expect the downside reversal. When the indicator approaches the 30 level, it means the market is oversold and expect the buy side reversal.

As you can see the image below it represents our selling entry in the GBPCAD forex pair. The price action kept testing the resistance level, and when the RSI approached the overbought area, it was a sign to go short. Soon after our entry, we witness the brand new lower low.

As you can see in the below image when the price action prints the brand new lower low, it started holding sideways for a couple of candles also at that time RSI indicator signals the buy trade but price action wasn’t moving upward. This was the sign that the indicator knew the price is overextended, and from here, the correction is mandatory. So when we got the divergence, we choose to close our whole selling trade. By using the divergence, you can accurately predict the market reversal; also, you can milk the market to the bottom level or the peak point. Divergence is the easiest most straightforward and most effective way to understand what is going on behind the scene in the market.

CONCLUSION.

Taking profit is the major component of trading; even the new traders always dying to book the profits. In contrast, the professionals always desire to hold their positions for the more extended targets. Your profit taking habits will determine how much amount of money you are going to make or not going to make. Impulsive behaviours often lead to failure in trading, so study yourself find out what triggers you to close the trades and always control yourself to hold for the more extended targets.

 

Introduction

The RSI stands for the Relative Strength Index, and it is one of the most popular indicators in the market. The RSI indicator was developed by J Welles Wilder, and he explained this indicator in his book New Concepts in Technical Trading Systems in June of 1978. The RSI is a momentum indicator that measures the speed and the change of the price movements. The RSI measures how well the underlying asset is performing against itself by comparing the asset strength of the up days versus the down days. The RSI has a range between 0 to 100, and the reading above 70 indicates the overbought conditions, and the readings below 30 indicate the oversold conditions. The RSI indicator is featured in the number of articles, books, and interviews over the year. The RSI signals can be generated by the overbought and oversold conditions, bullish and bearish divergence, centerline crossovers and failure swings. By default, the RSI used the 14-period averages, but this can be lowered to increase the sensitivity of the asset. You can set the parameters according to the asset volatility; the higher the volatility, use the higher average and lower the volatility, use the lower average. The overbought signal at 70 and oversold signals at 30 are also the traditional levels; traders can adjust these setups to better fit the security or analytical requirements. Using the 80 and 20 levels automatically reduces the numbers of overbought and oversold readings.

DEFINING THE CURRENT TREND

RSI indicator provides so many advantages to the traders, which makes it the celebrity indicator. Most of the traders think RSI only provides the buy and sell signals, but it’s not true, the RSI also provides the ability to gauge the primary direction of the trend. So, first of all, we must define the range where the RSI can track the bull and bear markets. For the bull market, we suggest you look out for the 66.66 readings, and the bear market uses the 33.33 readings. I know this is slightly different from the traditional levels of 80/20 and 70/30. These readings of 66.66 and 33.33 provided by John Hayden in his book, titled “RSI: THE COMPLETE GUIDE.” According to the author, he suggests that these numbers measure the true bull and bear trends, not by default readings.

4 Simple RSI Trading Strategies

1. RSI SWING REJECTION.

This trading approach is a very new RSI trading strategy, this one is not very popular among the traders, but it works very well on all the timeframes and in all types of market conditions. This Technique is called the RSI swing rejection.

FOR BUY

1. RSI approached the oversold territory.
2. RSI crosses above the 30 level.
3. RSI prints another dip without going below into the oversold territory.
4. RSI breaks its most recent high.

The image below represents the buying trade in the AUDCAD forex pair.

 

As you can see in the below image point, one shows the price action approached the oversold territory, which means the sellers are exhausted in this pair and soon expect the reversal. So point 2 represents the price action reversed from the oversold territory and the third point showing the sellers tried again but the immediate push from the buyers { point 4 } not accepting the sellers and are ready to go long from here. After our entry price action without any struggle goes higher, and it prints the brand new higher high.

FOR SELL

1. RSI approached the overbought territory.
2. RSI crosses below the 70 level.
3. RSI tries to print another top, but it failed, and it stays below the overbought territory.
4. RSI breaks its recent low.

The image below represents the selling entry in the AUDCAD forex pair.

As you can see that the point 1 shows the buyers are now weakening and the strong push {point 2} represents how aggressively sellers came into the show and tries to print the brand new higher high, but they failed, and the buyers again try to dominate the game, but they also failed to reach the overbought levels, and the strong buyers at point 4 finally came aggressively, and they printed the brand new lower low. In this pair, we go for the smaller stops, and the take profit was down to the higher timeframe support area.

 

RSI SUPPORT AND RESISTANCE

The RSI indicator also represents the actual support and resistance levels on the indicator, and these lines come in the form of horizontal zones or as a sloping trend line. Most of the traders do not know this, but they can apply the trend lines on the indicator just the way they apply on the price chart.

BUY ENTRY

The image below represents the buying trade in the AUDCAD forex pair.

The image below the RSI indicator was holding above the trend line, which is an indication for us to go long in this currency. We took buy entry when RSI almost approached the oversold area, with smaller stops, and we choose to exit at the most recent higher high.

SELL ENTRY

The image below represents the selling trade in the AUDCAD forex pair.

The image below shows the selling entry in this forex pair. You can see that the RSI indicator was respecting the trend line, and the price action was printing the brand new higher highs, so when the indicator approached the oversold area, it gave the breakout below the trend line. It was a sign of buyers weakening, and the sellers took control of the show. After entry, price action goes smoothly down and then a correction for sometimes and followed by the brand new lower low.

3. RSI DOUBLE BOTTOM

BUY ENTRY

The image below represents the Double bottom pattern on the price chart.

The image below represents the double bottom pattern on the AUDCAD forex chart. The double bottom pattern represents the sellers tried twice to print the low, but both of the time, they failed to do so. The aggressive buyers were sits at the oversold areas to eat all the sell orders to print the new higher high. After the double bottom, we took buy entry, and price action smoothly goes north, and it prints the brand new higher high.

4. RSI + MACD

In this strategy, we pair the RSI indicator with the MACD indicator to identify the trading signals. MACD is one of the simplest and most effective momentum indicators. The MACD fluctuates above and below the zero line, and it gives the trend line crossovers, centerline crossovers, and divergence to trade reliable opportunities. In this strategy, we paired the indicator with the RSI indicator to identify the significant trading opportunities.

The image below represents the buying opportunity in the EURGBP forex pair.

 

As you can see in the below image, when both of the indicators approached the oversold area, it’ a sign to go long in this forex pair. After our entry price action smoothly goes up, and it prints the brand new higher high. By pairing the one indicator with the other, we can easily filter out the low probability trades in the market.

CONCLUSION

True reversal signals are hard to identify on the price chart, but you can somehow got an idea of the reversals by checking the divergence on the chart. The RSI indicator displays the momentum so the asset can stay at an overbought and oversold area for quite a long time. So it is advisable to use the indicator in the oscillating market where the asset keeps alternating between the bullish and bearish movements. The traditional levels of 70 and 20 work very well in the market you can use them also you can use the John Hayden 66.66 and 33.33 levels to gauge the momentum better. Stop-loss is always recommended when using the RSI, and you can pair it with the other technical tools, or you can use the indicator as it is. The above we explain the four trading strategies which are mentioned below:

1. RSI SWING REJECTION.
2. RSI SUPPORT AND RESISTANCE.
3. RSI DOUBLE BOTTOM.
4. RSI + MACD.

These four are the best trading approaches we have ever discovered by using the RSI indicator.

Introduction

Relative strength index and the stochastic oscillator both are momentum oscillator which is used to forecast the upcoming price movements. Both of these indicators have different objectives, theories, and methods to trade. RSI and Stochastic are the celebrity indicators in the industry which widely used by the all type of traders in stock and Forex market.

RELATIVE STRENGTH INDEX.{ RSI }

Developed by the J Welles Wilder, the Relative Strength Index is a momentum indicator that measures the speed and the change of the price movements of the underlying trend. Wilder featured this indicator in his book “New Concepts in Technical Trading Systems”. In his book, he also featured the Parabolic SAR, ATR and ADX indicator. RSI is a prevalent momentum indicator that featured in the number of books, articles and magazines over the years. Andrew Cardwell introduced the positive and negative reversals for the RSI indicator, and Constance Brown featured the concept of Bull and Bear market range for RSI in his book Technical Analysis for the Trading Professionals. RSI is an oscillator, and it consists of a single line which oscillates between the 0 to 100 levels. Wilder explains when the indicator goes near the 70 level, it indicates the overbought conditions and expects downside reversal. If the price holds at the 70 level for a more extended period, then it means the uptrend is super strong.

Conversely, when the indicator goes below the 30 level, it indicates the oversold market conditions and soon expects the buy side reversal and if the price action holds near the oversold level than simply means the sellers are desperate to move the price action down. RSI divergence is also a quite popular way to understand the upcoming market trend. Divergence is when the RSI indicator moves to one direction and price action move other direction, divergence shows the market is overextended and expect the reversal.

BULLISH DIVERGENCE.

A bullish divergence occurs when the price action prints the brand new lower low but indicator prints the higher low that matches correspondingly lower low in the price. This indicates the rising bullish momentum and any long trade from the break of the significant resistance area will be a good idea.

The image below represents the bullish divergence in the GBPNZD forex pair.

In the image below, the price action was printing the lower low, but the indicator failed to do so; instead, it starts moving to the upward direction which means the indicator didn’t like he selling anymore and now its buyers turn to lead the market. When the price action breaks the most recent resistance area, we choose to go long in this one.

BEARISH DIVERGENCE.

A bearish divergence occurs when the price action prints the brand new higher high but indicator prints the higher low that matches the correspondingly higher high in the price. This indicates the risking bearish momentum and any short trade from the break for the significant support area will be a good idea.

The image below represents the bearish divergence in the GBPAUD forex pair.

As you can see in the image below the prices was in an overall uptrend, and when the price action prints the bearish divergence, it means the market hit the top level, and now all we need to do is to prepare for reversals. As the price action breaks below the support area, we took sell entry for the brand new lower low.

RSI SWING REJECTIONS.

Another new RSI trading strategy which is not a quite popular but very effective way to trade the market. This strategy is known as swing rejection, and it has four parts:

BUY TRADE.

1. Make sure RSI is in overbought territory.
2. RSI reverse below the 70 level.
3. RSI forms another high without crossing back into the overbought territory.
4. RSI breaks its most recent low.

The image below represents the selling trade in the GBPNZD forex pair.

As you can see the image below represents our entry, exit and stop loss in this forex pair. So overall the pair was in a downtrend and during the pullback phase when the indicator reached the overbought area it’s a sign to go short, but we wait for the further signals and when the price action confirms all the four points we choose to go short. After the selling trade price action took a little bit of time to drop, and it printed the brand new lower low.

SELL TRADE.

1. Make sure RSI is in oversold territory.
2. RSI reverse below the 30 level.
3. RSI forms another low without crossing back into the oversold territory.
4. RSI breaks its most recent high.

The image below represents the buying entry in the GBPNZD forex pair.

The image below represents the entry, exit and stop loss in the GBPNZD forex pair. As you can see, the pair was in a pullback phase, when the indicator fulfilled all four points. At point 1, the indicator represents the oversold market, at point 2, it represents some buyers try to take the price high, but at point 3 sellers came back. They tried to print the new lower low but failed, and immediately strong buyers smack back up, and they printed a brand new higher high.

STOCHASTIC OSCILLATOR.

Stochastic is a momentum indicator developed by George Lane in the late 1950s. Stochastic is a celebrity or even the favoured indicator because it is easy to understand, and it also has a higher accuracy to identify the potential trading signals. The indicator measured the relationship between a security closing price and its price range over the predetermined period of time. According to the Lane, Stochastic doesn’t follow the price, or it doesn’t follow the volume or anything instead the indicator follows the speed and the momentum of the price to shows what’s going on in the market. The indicator changes its momentum before the price action, which makes it the leading indicator in the industry. The bullish and bearish divergences are very useful when it comes to trading the upcoming potential reversals. The Stochastic is a range bound indicator scaled between the 0 to 100 level, and the 80 and 20 are the traditional levels which used by the traders to identify the potential trading opportunities when the indicator reaches the 80 level it indicates the overbought market conditions and expects a reversal, and when it reaches the 20 level it is a sign of the oversold conditions and any reversal will be good to go long. In short at overbought conditions, we take to sell, and in oversold conditions, we choose to sell. The indicator consists of two lines: one reflecting the actual value of the indicator and the other one reflecting its three day simple moving average. The intersection of these two lines is considered to be a signal of the upcoming price reversal, as it indicates a large shift in the momentum. Keep in mind that the stochastic can stay at the oversold and overbought conditions for long enough time, so don’t a stochastic sheep who just blindly hit the buy and sell when price action approaches these levels. Instead, use other indicator with the stochastic to filter out the bad trading opportunities.

PAIRING THE STOCHASTIC WITH THE RSI INDICATOR.

FOR BUY.

1. Look for the trending market.
2. Check both of the indicators if they both are saying the market is preparing to go long then take buy entry.
3. Put the stop loss just below the entry.
4. Go for the brand new higher high.

 

The image below represents the buying entry in the CHFJPY forex pair.

The image below represents the entry, exit and stop loss in the CHFJPY forex pair. As you can when the prices were turned sideways and when both of the indicators reached the oversold area and gave the sharp reversal, it means that the buyers are now back into the show and brand new higher high has very likely chance to happen.

FOR SELL.

1. Look for the downtrend.
2. Check both of the indicators if they both are saying the market is preparing to go short then take sell entry.
3. Put the stops above the entry.
4. Go for the brand new lower low.

As you can see in the image below the pair represents the selling trade in the GBPJPY forex pair.

The image below represents the entry, exit and stop loss in the GBPJPY forex pair. On the weekly chart, the price action was in an uptrend, and when both of the oscillators reached the overbought area and the price action prints the strong red candle, it is a sign for us to expect the brand new lower low. As we took the sell entry price action immediately dropped, and we witnessed the drop of 12000+ pips within just nine months.

STOCHASTIC SWING REJECTIONS.

BUY TRADE.

1. Make sure Stochastic is in overbought territory.
2. Stochastic reverse below the 80 level.
3. Stochastic forms another high without crossing back into the overbought territory.
4. Stochastic breaks its most recent low.

The image below represents the buying entry in the GBPAUD forex pair.

The image below represents the entry, exit and stop loss in the GBPAUD forex pair. As you can see, the sellers having a lot of struggle to go down and also at the same time, price approached the oversold area. So when all the 4 point instruction was followed the stochastic oscillator, we choose to go long in this pair, the stops was just below the entry, and for the take profit, we choose the brand new higher high.

SELL TRADE.

1. Make sure Stochastic is in oversold territory.
2. Stochastic reverse below the 20 level.
3. Stochastic forms another low without crossing back into the oversold territory.
4. Stochastic breaks its most recent high.

The image below represents the selling entry in the NZDCHF forex pair.

As you can see in the image below, it represents our entry, exit and stops loss in the NZDCHF forex pair. As you can see the pair was in an overall uptrend and the stochastic at overbought area means the reversal is about to happen. Still, we wait for the precision entry only when the indicator followed all the four steps of our strategy. This strategy is the new one in the market, and it often gives the excellent risk to reward ratio trades, and simply expect the fewer trades in the market. Whenever you find all the four points in the market, it’s a sign for you to go big in your trades and always expect the brand new higher high or lower low.

BOTTOM LINE.

Both of the indicators are the celebrity in the industry; both of them worked at different market conditions. RSI is designed to measure the speed of the price movements, and the stochastic oscillator works well in the choppy markets. The RSI consists of one single line which oscillates between the 70 to 30 level, and the stochastic oscillator consists of two lines which move between the 80 and 20 level. Overall, the RSI indicator is useful to trade the trends, whereas to trade the ranges and channels always go for the stochastic oscillator.