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Heiken Ashi RSI Forex Trading Strategy

“Buy low, sell high!” It was the mantra of every merchant. In the case of a short trade, “sell high, cover low” also applies. However, in most cases, traders buy high and sell low. As a result, they end up losing money instead of making a profit from the forex market. This often happens when traders are trying to catch up to trends and momentum. They end up buying when the price is near the top or short when the price is nearing the bottom.

Buying low and selling high usually occurs when traders successfully trade a trend reversal setup. This is because trend reversal setups aim to buy a forex pair when it's down and sell it when it's on the top. Trend reversal setups, when executed successfully, are usually very satisfying. Traders can look at their charts and see prices bounce off their expected levels and see prices move in their direction, giving them huge profits.

However, trend reversal strategies are easier said than done. Setting a trend reversal involves trading against an existing trend. This means you are trading against the current market sentiment. For this reason, trend reversal trading strategies are not for the faint of heart. Reversal traders are usually fine with losing a few here and there to make big profits in the long run.

Heiken Ashi RSI Forex Trading Strategy is a systematic trend reversal strategy that generates trade setups on the breakout of opposing support or resistance lines and confirms trade settings based on several trend and momentum indicators.

Heiken Ashi Candle

Heiken Ashi Candlesticks is a trend following indicator that also serves as a new way to draw price candles.

Heiken Ashi literally means “average bar” in Japanese. The Heiken Ashi candlestick is basically a candlestick that has a modified open and close price based on the average historical price movement. The result is a candlestick that changes color only when it sees a short-term trend or momentum reversal.
Heiken Ashi candlesticks are very useful in determining short-term trends and momentum reversals. Traders can use the color change of the Heiken Ashi candlestick bar as an entry signal for a trend reversal. It is also very useful when executing trade setups that require the high and low of each candle to allow traders to identify price action based on swing highs and swing lows, or traders in cases where the trader is looking for support and must represent resistance based on swing highs and swing lows. .

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Many Heiken Ashi Candlestick traders also use it as a systematic way to track their stop losses and protect their profits while allowing their trades to make more profits.

Relative Strength Index

The Relative Strength Index (RSI) is one of the most popular technical indicators used by many traders. This is because the RSI has a variety of uses that are useful for mean reversal, momentum, and trend-following traders.

The RSI is an oscillator-type technical indicator that draws an oscillating line in the 0-100 range. He also usually has marks at levels 30, 50, and 70.

The direction of the trend is usually based on where the RSI line generally moves in relation to the 50 level. When the RSI line is above 50, the trend direction is bullish. Generally, if the RSI line stays below 50 then the trend direction is bearish.

The 30 and 70 levels are usually used to identify oversold and overbought market conditions. If the RSI line drops below 30, the market could be oversold. If the RSI line breaks above 70, the market could be overbought.

On the other hand, momentum traders see things differently. A break above 70 could mean bullish momentum is gaining momentum, while a drop below 30 could mean bearish momentum is gaining strength.

Some traders also added 45 and 55 levels to confirm the trend. Generally, when the RSI line is above 50 and finds support at 45, the market is in an uptrend. Generally, when the RSI line is below 50 and meets resistance at 55, the market is in a bearish trend.