RSI is the Relative Strength Index. It measures momentum and price on a chart. Momentum is the key to trading. If there is no momentum, there is no trade. Momentum on the RSI creates 4 kinds of signals. They may be thought of as “signs” or “clues”. Each signal tells a story and the signals together can tell a story.
Traders who understand these signals are aware when the market is retracing or continuing with the existing trend. Knowing these things when you view a trading chart makes reading it and understanding it much simpler as well as knowing how and where to act on the information in front of you.
If you trade 4 major pairs and you trade the hourly chart you would need to manually check every hour to see if one of the 4 signals occurred. This only takes a few moments manually. However, there is an RSI that actually checks for you. It is called the RSI Paint Indicator.
The RSI Paint Indicator “paints” a new line each time a new price is formed; a positive divergence, negative divergence, positive reversal or negative reversal. These signals help the trader read two kinds of momentum on the trading chart. By understanding this momentum traders are able to make wise decisions about when to enter and when to exit the market.
The RSI Paint Indicator allows the trader do other things while the RSI Paint Indicator watches price on as many currency pairs as required and any time frame. When a new signal occurs the trader sees a small box on the screen with the currency pair, the time, and the type of signal. The alert is sent to the computer and then to either your email or your cell phone in case you are not in front of your computer.
The RSI Paint Indicator is a standalone trading indicator that alerts the trader when to trade in particular RSI reversals as these are the little known highly potent trading signals on RSI. If you add the RSI Paint Indicator to your charting package you will begin to understand the importance of momentum in trading any financial instrument. The RSI Paint Indicator works on the highly popular Forex trading platform – Metatrader which can be found at many brokers.