#3. Combine the RSI indicator with Moving Average
Moving Average is an extremely effective trading indicator, there are many traders who trade with a system that only includes Moving Average lines.
So what is the idea to combine Moving Average with RSI?
This system will use the SMA 30 and SMA 100 combined with the RSI indicator to act as a signal filter.
Draw a horizontal line RSI 50 on the chart to observe the system more easily.
The trading idea is as follows:
For BUY orders
Enter when SMA 30 crosses SMA 100 and RSI is above 50.
Exit the order when SMA 30 cuts down to SMA 100 or when RSI drops below 30.
For SELL orders
Enter a trade when SMA 30 cuts down to SMA 100 and the RSI indicator is below 50.
Exit the order when SMA 30 crosses SMA 100 or when RSI reaches 70.
Please see the following example of the EURUSD pair with a BUY order:
You can see the trading conditions are satisfied with SMA 30 crossing over SMA 100 and RSI above 50.
At this point, we will execute a BUY order and wait to exit when SMA 30 cuts to SMA 100 or RSI drops below 30 as shown above.
Example with SELL command:
You can see the trading conditions are satisfied with SMA 30 crossing over SMA 100 and RSI above 50.
At this time, we will execute a BUY order and wait to exit when SMA 30 cuts to SMA 100 or RSI drops below 30 as shown above.
Example with SELL command:
You can see that the entry conditions are satisfied with SMA 30 cutting down to SMA 100 and RSI below 50.
At this time, we will execute a SELL order and wait to exit the order when RSI rises above 70 or SMA 30 cuts above SMA 100.
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