Advanced system #3 (Neat entry: RSI + Full Stochastic)

Edward,
I don't if it is just a coincidence or not, but I have not seen one single case where RSI plunges below 20 and the currency pair has stayed over the 150SMA. A plunge under RSI 20 means a very significant plunge on the actual graph...
Claude

Hi Claude,

It is done on purpose.
I know it may look like a mistake at first glance :)

Best regards,
Edward

Edward,
The standard figures for overbought--oversold levels are 70-30 for RSI and 80-20 for Stoch. Is it a mistake on your part or did you reverse the two on purpose?

Thanks,
Claude

Hi Clint,

As I said, once RSI registered in oversold/bought area, we no longer care where it'll go next. Usually RSI is the first to reach that area. We can wait for a signal from Stochastic for up to a week.

Best regards,
Edward

Hi again Edward,

Thanks for the reply - that is indeed helpful. How much longer does the RSI plunge "stand?" i.e. how soon after should the Stoch cross take place? Using daily charts.

Thanks
Clint

Applied to Close.

Regards,
Edward

Ed

With the SMA is it Close or Open

Barry

Hi Clint,

RSI qualifier is a simple plunge below 20 or rise above 80. After that all attention turns to Stochastic, RSI movements no longer matter.

Stochastic should produce a cross below 30 (Long) or above 70 (Short). Again, we do not wait for the indicator to exit oversold/overbought zone, we just need a cross and a closed candle.

Regards,
Edward

Hi Edward,

This is a great strategy. Please will you clarify something for me - do we enter after the RSI and the Full Stoch. has broken 20 (or 80) or do we enter after they have re-emerged (i.e. gone below 20 and then gone back above)?

Thanks in advance,
Clint

Hi Sam,

I would not recommend using current settings for other than daily time frame.

What other setting should you use, if you want to try it on 30 min or hourly charts?
I would change SMA 150 to SMA 50 or 80. Everything else will be the same. I can't however, promise any results, since I haven't traded this way.

Regards,
Edward

Dear Edward,

Can this strategy be employed on a smaller timeframe, say the 30min or 1hr?

If so, do we need to adjust the settings?

Kind regards,

Sam

For all those that has contributed, i say God bless You. Keep trying out new methods. Nice time

To filter some of bad trades, I use 9 EMA method; a screenshot can also be found at page 15.
If even after applying 9 EMA you find yourself stopped 2 times in a row as price dances around 150 SMA, you should pause for 3-4 days at least and look to re-enter at better opportunity: if you find that while you've been waiting the price has already advanced in a clear trend, that's just great, simply look to enter on retracement.

Regards,
Edward

What if the price is back and forth between above the 150SMA and then the next day below the 150SMA?

Hi Daniel,

Yes, it is a daily set up.
You have to sit tight and wait for the opportunity, which indeed presents itself not that often: actually many weeks may pass before you get one.

Best regards,
Edward