RSI is an oscillator indicator while moving average is a trend indicator. Today being Thursday october the 31st of 2019, the EUR/USD market has been in a bullish trend most of the time.EUR/USD market has managed to rise above 1.1170. The question is will this bullish trend continues or will the EUR/USD market reverse and become a bearish trend. This is indicated from the candlesticks chart below;
From the candlesticks chart above, there is point A which is located along the RSI and point B located along the moving average. Although the EUR/USD market has been in a bullish trend most of the time and we don't know whether the EUR/USD market will continue to be in this bullish condition or it will reverse and become a bearish trend, we can use the concept of RSI and moving average to predict the direction of the EUR/USD market for the remaining time.
Concept of RSI
Using the concept of RSI, the market is normally considered to be overbought if the RSI rises above 70 and oversold if the RSI falls below 30. At point A, the RSI has risen above 70 thus an indication of an overbought EUR/USD market condition. Although the EUR/USD market has been bullish today and managed to rise above 1.1170, we can decide to follow the concept of RSI and open a sell position because at above 70, that is an indication of an overbought market condition thus the EUR/USD market will reverse and start downwards trend.
Concept Of Moving Average
Using the concept of moving average ,the market is considered to experience a reversal trend if the price rises above the highest high of a moving average or falls below the lowest low of a moving average.At point B, the price has risen above the highest high of a moving average thus a downward reversal trend has started to take place. Although today the EUR/USD market has been in a bullish trend and managed to rise above 1.1170, We can decide to follow the concept of moving average because the price has risen above the highest high of a moving average and open a sell position. Here is how our trading idea for EUR/USD sell market looks like today;
SELL 1.1170 T/P 1.1120 S/L 1.1240
Make sure to apply risk management while opening your position because this is not an investment advice but just a trading idea