To get the most out of this article and the video below, we recommend that you read these two articles about the RSI-indicator (introduction to RSI and RSI a controversial indicator) and introduction to harmonic patterns.
In the video below we go through how the RSI indicator can be used with the harmonic patterns to get more success in your daytrading.
We will look at 5 concrete examples in the DAX and use the timeframes 15 and 5 minute.
A method for combining the RSI indicator and harmonic patterns
We use two important rules if we want to succeed with the RSI-indicator:
- If RSI rises above 66 and hasn’t fallen below 33, we only look to buy (bullish cycle).
- If the RSI has fallen below 33 and hasn’t risen above 66, we only look to sell (bearish cycle).
The following withdrawal from these cycles in the RSI indicator is equal to a corrective wave in the market. That means a pullback before the price continues to move up or down. In these waves we use the harmonic patterns.
Watch the video here:
In the video the Bat pattern was widely used. This pattern is one of Scott Carney’s best performing and is important to know.
The RSI indicator is very successful combined with harmonic patterns.
The method by combining the RSI indicator and harmonic patterns has a very high success rate in my own daytrading.
In the examples above we have four winning trades and only one losing trade. Not only is the success rate high, but the system also gives very good risk-to-reward setups which normally lies between 1:2 and 1:3.
The method can also be used on higher timeframes, on forex, stocks, commodities and so on.
We hope, that you can make use of it in your daytrading.
Questions or comments?
Do you have any questions or comments? Then please let us know below.