This is a question that is asked by one of our fellow traders in this blog.
I have been using Relative strength Indicator as my primary indicator to do my scalping, but sometimes, it fails me in my trade. Is there any other forex indicator I can combine with the Relative Strength Indicator to make my trade better?
Therefore in this post, I will be sharing with all of you what I think is the best forex indicator combination to go with RSI for a scalping trade. However if you have anything to share, do feel free to comment below as your input will be very useful for this community.
I always like to have a different variety of indicators in my trading as they will be able to show me different views of the trade that I am going into.
For scalping trading system, below are what I think is the best to combine with your relative strength indicator.
1) MACD Indicator – The relative strength indicator is used to tell you whether the market is currently overbought or oversold. However it will not be able to help you to confirm if the price is going to be repelled by a major support or resistance.
In this scenario, you can make use of the MACD histogram to help you verify your trade. If you are going for a short trade after you see the RSI going overbought. You should check the histogram of the MACD for more confirmation. When you see the histogram getting shorter and shorter on the upside, it is a sign that the buyer are weakening and the seller are gaining strength and this will give you more confidence when entering a short trade.
If you are planning to go for a long trade, you should make sure that you see the MACD histogram getting shorter and shorter on the downside.
2) CCI Indicator – Other than the MACD, you can also make use of this CCI to help you in your scalping trade. As stated in one of my post about the CCI, you can enter a short trade when you see this indicator moving below the 100 level and you can enter a long trade when you see this indicator moving above the 100 level.
The above are what I think the best forex indicator combination to go with your relative strength indicator. However this is strictly my personal opinion and you should always try it out on a demo account to see if it works for you before trading live with it.
I hope that I have answered your question and do participate in our monthly question and answer session.