Relative Strength Index (RSI) – Trading Decision Point Fade Entry Tactic
Fade trading is all about “buying low and selling high”. The expectation is for the ENTRY LEVEL Decision Point to contain market momentum and the integrity of the price level to remain intact. The question on a fade strategy always centers around the validity of an inflection point; “will the level hold”? This will always be an “unknown fact”, so the assumption is that the entry point has been properly qualified as a market structure point and is in alignment with price action.
The RSI or similar type oscillators can provide good insight into the timing of a fade strategy with either an overbought / oversold / or divergence measurement.
Chart 1: 5-Minute Chart with MTB Pro Trading Decision Points and Relative Strength Index (RSI).
Chart 2: 5-Minute chart. As price action approaches the MTB Pro Trading Decision Point the RSI becomes overbought.
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