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 Friday, October 25th, the EUR/USD market has been trending downwards most of the time and managed to go as low as 1.1095 thus many traders have remained confused whether to continue trading downwards or to change their positions and open an upward 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 strategy 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 fallen below 30 thus signaling the trader of an oversold market condition. This will help the trader to close the previous sell position for the EUR/USD currency pair and open a new buy position at 1.1095
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 fallen below the lowest low price thus signaling the trader to close the previous sell position and opens a buy position for EUR/USD currency pair at 1.1095
Here is our trading thought for today;
buy : 1.1095 TP: 1.1145 SL: 1.1035
Make sure to apply risk management while opening your position since this is not investment advice but just a trading idea