#6. Combine the RSI indicator with the candlestick reversal pattern
Similar to combining with Moving Average or Bolinger Bands indicators, combining RSI with candlestick reversal patterns also significantly increases trading efficiency, minimizing false signals compared to when using alone. odd.
Trading ideas:
Wait for the market to enter the oversold or overbought RSI zone.
Wait for a reversal candlestick pattern to appear.
We'll get into the example now!
Example 1: XAUUSD on frame D1
During the uptrend of XAUUSD on the D1 frame, RSI entered the overbought zone and the Evening Star reversal candlestick pattern appeared.
This is a good reversal signal and you can execute a SELL order when the Evening Star candlestick pattern completes.
Example 2: XAUUSD on frame D1
An example with another reversal candlestick pattern.
During the downtrend of XAUUSD, when RSI enters the oversold zone, the price chart also appears with a Morning Star bullish reversal candlestick pattern.
This is a good reversal signal and you can enter a BUY order when the Morning Star candlestick pattern completes.
Note: You can see on the left, the RSI has also entered and remained in the OVERSOLD zone but the market continues to decline. Clearly, apart from the OVERSOLD RSI signal, there are no reversal signals from other technical tools in general, or candlestick reversal patterns in particular. Once again I repeat that using RSI alone is difficult to bring high efficiency because there will be a lot of noisy signals.
In fact, I really like using candlestick reversal patterns because they are extremely effective if you know how to use them CORRECTLY.
Here is another example:
Example 3: XAUUSD on frame D1
During the uptrend of XAUUSD on the D1 frame, when RSI enters the overbought zone and a Bearish Engulfing reversal candlestick pattern appears.
This is a good reversal signal, you can SELL when the Bearish Engulfing pattern completes.
Note: If you notice on the left side when RSI entered the OVERBought zone 3 times and there were NO candlestick reversal signals. If you don't wait for confirmation from the bearish reversal candlestick pattern to signal to SELL, you will probably have consecutive losing orders.
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