The RSI is a versatile indicator, and can be used to provide entry signals during a trend. To get the signals a moving average is applied to the RSI.
1. Trades are only taken in the direction of the trend. For an uptrend only take longs. For a downtrend only take shorts (puts).
2. During a downtrend the RSI must move above 60 to indicate a pullback. When the RSI crosses back below its moving average (can be at any number, just as long as the RSI is or was above 60 recently) go short.
3. During an uptrend the RSI must move below 40 to indicate a pullback. When the RSI crosses back above its moving average (can be at any number, just as long as the RSI is or was below 40 recently) go long.
4. Give the price at least two or three bars (whatever time frame you are trading on) or more before considering an exit. This gives the price some time to move in your favor.
1. Trades are only taken in the direction of the trend. For an uptrend only take longs. For a downtrend only take shorts (puts).
2. During a downtrend the RSI must move above 60 to indicate a pullback. When the RSI crosses back below its moving average (can be at any number, just as long as the RSI is or was above 60 recently) go short.
3. During an uptrend the RSI must move below 40 to indicate a pullback. When the RSI crosses back above its moving average (can be at any number, just as long as the RSI is or was below 40 recently) go long.
4. Give the price at least two or three bars (whatever time frame you are trading on) or more before considering an exit. This gives the price some time to move in your favor.