RSI is an oscillator indicator while moving average is a trend indicator.RSI is used to indicate whether the market is oversold or overbought while moving average is used to indicate whether there is support or resistance in the market.
Today being Thursday, October 17th, the EUR/USD market has been trending upwards most of the time and managed to go as high as 1.1140 thus many traders have remained confused whether to continue trading upwards or to change their positions and open a downward trend. Using the concept of RSI and moving average, we have managed to predict the direction of the market for today for the remaining time which if a well risk management is applied more money is going to be made.This is indicated from the candlesticks chart below;
From the candlesticks chart above, there is point A located along the RSI and point B located along the moving average.We have used these two indicators to predict the direction of the market for the remaining time as follows;
Concept of RSI
Using the concept of RSI, the market is considered to be overbought if the RSI goes above 70 and oversold if the RSI falls below 30. At point A, the RSI has gone above 70 thus signaling the trader of an overbought market condition. This will help the trader to close the previous bought position for EUR/USD currency pair and open a new sell position at 1.1140
Concept of Moving Average
Using the concept of moving average, the market is considered to be in support condition if the moving average falls below the previous low price and in resistance condition if it rises above the previous highest high price.
At point B , the moving average has risen above the highest high price thus signaling the trader to close the previous bought position and opens a sell position for EUR/USD currency pair at 1.1140.
Here is our trading thought for today;
sell : 1.1140 TP: 1.1070 SL: 1.1190
Make sure to apply risk management while opening your position since this is not an investment advice but just a trading idea