The 4 levels RSI (Relative Strength Index) MT4 Forex indicator is a great overbought/oversold technical indicator that works on 4 levels.
It’s one of the most widely used technical indicator that works for any financial market, including Forex.
The 4 levels RSI indicator plots 4 levels on the activity chart.
- The overbought levels include 65 and 75.
- The oversold levels include 25 and 35.
Don’t use the 4 levels Relative Strength Index indicator on its own! This won’t work in trending markets.
Instead, combine it with a simple trend-following technical indicator.
Combine for example with a simple or exponential moving average to identify the overall trend first.
Then trade the RSI signals in the overall direction of the trend.
- Overall trend up? Trade the oversold RSI signals between 25 and 35.
- Overall trend down? Trade the overbought RSI signals between 65 and 75.
Feel free to experiment with the 4 levels RSI indicator period parameter to create faster or slower entry levels.
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4 Levels RSI Forex Indicator Chart
Here’s an example of how the indicator should look like when loaded onto the Metatrader 4 chart.
You can apply the indicator to any currency pair and time frame of your preference.
Finding Buy and Sell Triggers With The 4 Levels RSI Forex Technical Analysis Chart Indicator
Below is an example of how to buy and sell currency pairs with this Forex indicator:
Buy Trigger: Open a long trade when the overall trend is up and the 4 Levels RSI indicator turns back above the 35 level from below.
Place initial stop loss 3 pips below immediate support, or use your own stop loss placement method.
Close the buy trade for a reward/risk ratio of 1.5 or better.
Alternatively, take profit at predetermined profit target level, for example 25 pips on the M5 intraday chart.
Sell Trigger: Open a short trade when the overall trend is down and the 4 Levels RSI indicator turns back below the 65 level from above.
Place initial stop loss 3 pips above immediate resistance, or use your own stop loss placement method.
Close the sell trade for a reward/risk ratio of 1.5 or better.
Alternatively, take profit at predetermined profit target level, for example 40 pips on the M15 intraday chart.
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RSI period, colors, width, style.
The indicator can’t be used as a stand-alone signals indicator.
- Trend indicators (Moving Average, Bollinger Bands, ADMI,…)
- Price action methods and techniques
More Info About This Indicator
Tradable Currency pairs: Any
Trading Platform: MT4
Time frames: M1, M5, M15, M30, H1, H4, D1, W1
Indicator Type: RSI
Copy and paste the indicator in the MT4 indicators data folder.
Then restart the MT4 terminal and attach it to any chart.