MACD + RSI Powerful Forex Trading Strategy - Vladimir Ribakov
MACD + RSI Powerful Forex Trading Strategy - Vladimir Ribakov
By
Vladimir Ribakov
RSI (Relative Strength Index) is another powerful indicator used in technical analysis that
aims to chart the current and historical strength or weakness of an instrument based on
the closing prices of a recent trading period. RSI is mainly used to spot overbought and
oversold situations on the market but also to find out the current momentum of a given
instrument.
Both these indicators very popular, reliable and loved by many traders and play a crucial
role in technical analysis. When combining both these powerful indicators together we get
a high accuracy trading strategy which I use in my trading to look for trend reversals. In
this article, I will explain in detail about this strategy with an example.
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here).
As always I start my technical analysis from the highest timeframe (in combination of
three time frames of multi time frame analysis) which in this case will be the H4 chart.
Looking at the H4 chart we could see that the price has created three descending waves
which pushed to the downside and ended up with bullish divergence. This bullish
divergence can be clearly seen on the moving averages and histogram of the MACD
indicator and on the RSI indicator as well as you can see on the screenshot below.
So basically both the indicators indicate to us that the bears are running out of steam and
the buyers might take control here. At this moment the area shown in the screenshot
below becomes a strong support zone, as we got three fake attempts to break below this
area to the downside.
While the bullish divergence is building up, we can in the screenshot below that the
histogram and moving averages of the MACD indicator is crossing to the upside (even
though it has crossed several times before but after crossing, it missed the next important
step). At this moment while looking at the RSI indicator we could see that it is breaking
above its own resistance and stabilizing its levels above it. Now, this resistance area has
turned out to be a support area.
Note: If you want to learn more in-depth insights about divergences, you can
benefit greatly from the videos on my channel here while also embarking upon
Divergence University for comprehensive divergence education.
Mainly at this time, we can see that the price is creating lower highs, lower lows and the
RSI indicator is creating higher highs, higher lows.
So when we spot such a thing we can understand that the bears are potentially losing
their control.
So we can see that these two powerful indicators indicate to us that there is a good
chance that the buyers might take control from here (we don’t know for sure if they will,
but we do know that based on the technical analysis the bears are losing their
momentum)). If they do then this is where your risk and reward will come into play in your
favor and might provide you a great opportunity.
At this moment we can see that the multi-timeframe reads in the same direction, as you
can see it starts from the turnaround on the H4 chart, and it fits into the turnaround. The
H1 chart gives you the official signs and falls into the same direction that the indicators
hint to us, and you get yourself a fantastic opportunity to enjoy from the buys.
Note: If you want to learn about Money Management you can find it here
What Makes This Strategy So Powerful And Accurate?
This strategy is so powerful and accurate because in this strategy we are going to combine
two proven in time indicators using multi time frames. Using the price action along with
the technical indicators provides very high accuracy trading setups along with a great risk-
reward ratio.
Conclusion
So traders this is how I use this strategy in my trading to find great possible trades. When
you are able to spot this turnaround (and\or join bigger trends) on the two timeframes
combined with these two powerful indicators (MACD + RSI) then you got yourself a
fantastic risk-reward opportunity which can work in your favor with high probability and
end up as a winner.
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