The RSO Relative Strength Oscillator Indicator For MT4
Table Of Contents:
- The RSO Relative Strength Oscillator Indicator For MT4
- Detecting Divergences With The RSO Relative Strength Oscillator Indicator For MT4
- Detecting Strong Trends With RSO Relative Strength Oscillator Indicator For MT4
- Relative Strength Oscillator Indicator For MT4 Conclusion
The RSO Relative Strength Oscillator Indicator For MT4 is basically the well known RSI indicator with shifted values. Personally I find the RSO much better readable than the RSI. Therefore, I can absolutely recommend this indicator.
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Alerts In Real-Time When Divergences Occur
The normal RSI oscillates between the values 0 and 100. The RSO Relative Strength Oscillator Indicator For MT4 however subtracts 50 from the RSI values to produce negative and positive values.
The negative and positive values are also used by the MACD oscillator and therefore you will have the familiar look and feel with the RSO indicator too. An additional advantage with the RSO is that you will see the middle line better compared to the 50-line on the standard RSI.
Another improvement is the color that is added in the RSO. The color shows you if the speed of the movement of the RSO Relative Strength Oscillator Indicator For MT4 is rising of falling. A rising speed occurs when the price is in a strong trend. A rising speed is indicated with green color while a falling speed shows a red color.
Strong trends (a rising speed of the trend) can occur in upward and downward trends. So you will see green and red areas in upward trends and also in downward trends.
Detecting Divergences With The RSO Relative Strength Oscillator Indicator For MT4
My preferred types of divergences are regular divergences which occurs after a strong and matured trend.
I use such types of divergences (especially on the time frame H4) on a regular basis to trade double tops and double bottoms which occur on lower time frames like M30/H1 in direction of the divergence. If you are interested in my FREE double top/bottom indicator which is used by 10,000+ traders then you can download it here: My FREE Double Top/Bottom Indicator
The RSO Relative Strength Oscillator Indicator For MT4 helps yo to detect such divergences easily. For a bullish divergence simply wait for the RSO to make a move below the -20 line and then wait until the price makes a new lower low while the RSO Relative Strength Oscillator Indicator For MT4 forms a higher low. You can see 2 such bullish divergences in the screenshot above. They are labeled with the thick green lines.
For bearish divergences please wait until the RSO Relative Strength Oscillator Indicator For MT4 moves above the 20 line. Then wait until the price makes a higher high while at the same time the RSO makes a lower high. In the screenshot above you can see 1 such bearish divergence.
The idea behind the concept of waiting for a strong and matured trend is that the mega banks as the market makers will transition from net short to net long during a matured downward trend. The majority of the herd is selling during the downward trend while the market maker must take the imbalance of the herd. Therefore, the market maker gets heavily long AND MUST reverse the price upward to get into the profit zone again. You can see from the 2 examples in the screenshot above how good this often works out.
During matured upward trends the market makers transition from net long to net short. Then they must drive the price downward.
Detecting Strong Trends With RSO Relative Strength Oscillator Indicator For MT4
As with the RSI, you detect strong trends also with the RSO Relative Strength Oscillator Indicator For MT4. In the following screenshot I have highlighted the zones where the trend makes very strong moves:
Strong moves are indicated when the value of the RSO moves below -20 or above +20. An experienced trend trader can extract money during these strong price moves. But be careful if a divergence develops. Then profit taking would be a good option.
Relative Strength Oscillator Indicator For MT4 Conclusion
The trader who already uses the RSI in his trading will easily adapt to the RSO Relative Strength Oscillator Indicator For MT4.
In my opinion the better coloring alone makes a switch from RSI to RSO a good choice.
