RSI in MA Indicator For MT4

RSI in MA Indicator For MT4

Table Of Contents:

  1. RSI in MA Indicator For MT4
  2. Trading ideas with the RSI in MA Indicator For MT4
  3. Interpreting the RSI in MA Indicator For MT4
  4. RSI in MA Indicator For MT4 - Buy Entries
  5. RSI in MA Indicator For MT4 - Sell Entries
  6. RSI in MA Indicator For MT4 - Conclusion

The RSI in MA Indicator For MT4 is an indicator which uses a combination of two popular indicators known as the Relative Strength Index indicator and the Moving Average indicator. The Relative Strength Index indicator is an off-chart oscillation indicator used for identifying oversold and overbought regions and also for trading bullish and bearish divergence trading opportunities. Now when you combine this with the tri-colour Moving Average indicator you will be able to identify and profit from colour transitions in the Moving Average; so when the RSI is in an oversold region and then the Moving Average of the indicator changes from yellow to blue then you may enter a buy trade and when the RSI is in an overbought region and then the Moving Average of the indicator changes from yellow to red then you may enter a sell trade.

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Trading ideas with the RSI in MA Indicator For MT4


Relative Strength Index (RSI) and Moving Average (MA) are some of the most used indicators in forex mainly due to their effectiveness. However, to use the standard versions of these two indicators, traders must load each individually to the trading chart and the moving average draws a line on the chart while the RSI draws an oscillating line on a separate chart below the main trading chart.

It, therefore, calls for a trader to learn how to interpret the two indicators to identify trading signals, which can be quite involving especially with the RSI indicator.

The RSI in MA Indicator For MT4 makes thing easier by combining the two indicators (RSI and MA) into one indicator to display only one line rather than having two different lines being displayed on the chart.




Interpreting the RSI in MA Indicator For MT4


As shown in the above screenshot, the RSI in MA Indicator For MT4 displays a coloured line on the main trading chart. The colour of the indicator line indicates the current trend depending on the values of the moving average and the RSI indicators.

Using the two indicators (RSI and MA) to determine the market trend helps filter out false signals and at the same time makes it easier for traders especially beginners to identify when a trend change occurs.

The standard RSI indicator is a momentum indicator that determines the magnitude of a price change and determines overbought and oversold conditions, which acts as potential indicators of an imminent trend change. On the other hand, the standard MA indicator is a trend indicator that determines the current trend in the market.

When using the standard RSI indicator there are two lines (one at the level of 70 and the other at the level of 30 along the vertical scale of the indicator chart) that are used as the overbought and oversold indicators respectively. And when the RSI indicator line hits the level of 70, it is an indication that the market has entered the overbought condition and a bearish trend reversal could take place any time.

On the other hand, when the RSI indicator line hits the level of 30, it is an indication that the market has entered the oversold condition and the bullish trend reversal could take place any time. In most cases, traders close their sell orders and buy orders when the levels of 30 and 70 are hit respectively anticipating the trend reversal to occur for them to place the respective trades. However, since the RSI is not a trend indicator, it is usually had to identify when the actual trend reversal occurs and that is why a trend indicator is usually needed.

In our case, the RSI in MA Indicator For MT4 uses the MA as the trend indicator to monitor when a trend reversal takes place.

The RSI in MA Indicator For MT4 indicator line changes colour depending on the value of the RSI while the oscillation of the indicator line (meaning the indicator line moving below or above the candlestick/bars) depends on the Moving Average value.

When the RSI value goes below 30 (meaning the market is in the oversold condition) the colour of the RSI in MA Indicator For MT4 indicator line changes to Red. On the other hand, when the RSI value goes above 70 (meaning the market is in oversold condition) the colour of the RSI in MA Indicator For MT4 indicator line changes to DeepSkyBlue. When the RSI value is in between 30 and 70, the colour of the RSI in MA Indicator For MT4 indicator is Yellow.




RSI in MA Indicator For MT4 - Buy Entries


There are two methods of placing SELL orders when using the RSI in MA Indicator For MT4.

The first one, which is the best, is for a trader to place BUY orders after the indicator line turns from red to Yellow and the indicator line has moved below the candlesticks/bars. Once the indicator line turns red, it shows that the market has entered the oversold condition and when it turns yellow from Red, it shows it has moved from the oversold condition. However, you have to wait for the MA to confirm that a bullish trend has started (or the trend has changed from bearish to bullish) by the indicator line moving below the candlesticks/bars.

The second method is for a trader to place BUY orders any time the indicator line goes below the candlesticks/bars as long as the line is Yellow.

The BUY orders should be closed immediately the indicator line turns DeepSkyBlue since that indicates that the market has entered the overbought condition and the market is prepared for a bearish reversal.

If the trader is practising short term trading, he/she could also close the BUY order when the indicator line moves above the candlesticks/bar; meaning they don’t have to wait for the indicator line to change its colour.

RSI in MA Indicator For MT4 - Sell Entries


There are two methods of placing SELL orders when using the RSI in MA Indicator For MT4.

The first one, which is the best, is for a trader to place SELL orders after the indicator line turns from DeepSkyBlue to Yellow and the indicator line has moved above the candlesticks/bars. Once the indicator line turns DeepSkyBlue, it shows that the market has entered the overbought condition and when it turns yellow from DeepSkyBlue, it shows it has moved from the overbought condition. However, you have to wait for the MA to confirm that a bearish trend has started (or the trend has changed from bullish to bearish) by the indicator line moving above the candlesticks/bars.

The second method is for a trader to place SELL orders any time the indicator line goes above the candlesticks/bars as long as the line is Yellow.

The SELL orders should be closed immediately the indicator line turns Red since that indicates that the market has entered the overbought condition and the market is prepared for a bearish reversal.

If the trader is practising short term trading, he/she could also close the SELL order when the indicator line moves below the candlesticks/bar; meaning they don’t have to wait for the indicator line to change its colour.


RSI in MA Indicator For MT4 - Conclusion


The RSI in MA Indicator For MT4 is a very interesting forex indicator. It brings the features of RSI and MA indicator into one indicator which makes it easy for beginners to use without taking too long to interpret the two separate indicators.

 

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