In the following figure, in addition to the presence of a trendline, we have a large divergence in correspondence with a key level, in this case a resistance. This resistance reinforces the divergence signal in this case also based on wide swings. A confirmation of the change in trend.

The divergence is wide, wide. Remember again that wide does not refer to the slope of the divergence lines, but to the distance between the swings. Even the case of divergence based on tight swings at an SR level, although of a slightly lower quality than the wide one, still gives a very valid signal. As this is a tight divergence, the fluctuations are not very visible. Better to switch to the line graph:.

The line chart can be used to better visualize swings and plot divergences. To check the correct breakout it is convenient to go back to the classic candles:.

In the following figure we have drawn a valid resistance that passes through the various maximums and we are in the presence of a tight divergence, identified on nearby oscillations. We do not know at the moment if there will be a breakout or if prices will continue following the trend. No trade without breakout. For more information on what will happen we can move on to observe the candles at a lower time frame.

This new consideration concerns the time frame currently in use. Typically using a single time frame does not give us accurate information. To confirm the trend change, we can observe the candles at a lower time frame to verify their divergence with RSI.

We have drawn our resistance zone and expect further reaction at that level. Entering Call we could risk losing the trade as prices could break the resistance. Our aim is to find a trend change signal. Your decisions must be made based on what you actually see in the chart without evaluating the next direction based on your personal impressions. Suppose we are in a 1 hour time frame H1.

It is not enough for the prices in the left chart to break out of support. We need to see what happens inside the candles in correspondence with the key area, through the tracing of trend lines and divergence lines:. We can now see the swings on M15 and thus plot our divergence. Furthermore, it is also easier now to plot trendlines as the fluctuations are evident, whereas before they were not noticed in the original time frame.

We have an SR level and we want to see what happens inside the candle whose shadow shows that the prices have reacted to the resistance. Same support and same downtrend. To see better we switch the H1 graph to line, where it is easier to notice the divergence tight :.

We have a resistance and a candle whose upper shadow indicates an attempt to react at that level. The candles of the highlighted area react at the SR level, as evidenced by the long lower shadows.

RSI divergence, SR level reaction, trendline breakout. The elements to evaluate an entry in Call are all there. In the area under consideration we see a candle with a long shadow, due to the reaction to the level.

If too far we risk losing the trade, If too close it is not very effective, so no trendline no trade. To solve the problem, we increase the second maximum of the divergence by moving to the lower time frame M Those who want further examples and insights for even safer entrances can complete the course by studying the second part, essential for those who want to seriously engage, becoming part of that minority of traders who earn with trading.

The second part expands the strategy with further trading techniques, for even safer entries. Detailed images, indicator, examples and attachments complete the system.

The complete strategy also including this first part in PDF with high quality images can be downloaded immediately by purchasing it at the price of only 89 euros. If you already operate with a broker in real with Forza Forex registration, you can request it immediately at info forzaforex.

Below you can see the brokers most used by our traders. It does not mean that they are absolutely the best, but they have been selected based on the number of registrations and trading operations. In addition to these, you can view the complete list of brokers with relative comparison.

By registering through these links you get preferential assistance, various free resources and the possibility of free access to the VIP signal room. Clear cookies before visiting a broker. Send your ID, teh identification number that the broker assigns you, to info freebinaryoptions.

Risk warning: "Binary options are not promoted or sold to retail EEA traders" If the broker is not authorized in your area, e. Our passion for trading led us to innovate and discover new tricks strategies, indicators or brokers. Caring for the new English-language FreeBinaryOptions. One, Ivan Griscenko, along with his father Giancarlo and his fellow American friend Robert Pavehouse, share the experience of several years of trading. Ivan still focuses with other popular binary options sites, as forzaforex.

View more posts. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. This site uses Akismet to reduce spam. Learn how your comment data is processed. This strategy applies to different assets, currency pairs, crypto, stocks, etc. WHAT IS THE RSI INDICATOR The Relative Strength Index, or relative strength index, is one of the most popular oscillators in technical analysis, commonly used by traders to identify a market price that is too high or too low.

This often happens in the case of a strong market trend. PART ONE. Left: link of lows, bullish exchange rate. Right: link of highs, bearish exchange rate. Therefore, minimums in the graph and minimums on RSI are connected, or maximums in the graph and maximums on RSI, but never minimums on the graph and maximums on RSI, or vice versa: Incorrect tracking In the graph seen above black background we have an increasing maximum higher high and in the RSI we have a decreasing maximum lower high which leads to a divergence between the trendlines and therefore to a possible price reversal.

We trace the trendline towards the decreasing minimum of the main chart lower low and the increasing minimum of the RSI higher low : The result is a change in the direction of the trend.

RSI COMPARED TO MACD Divergence can also be used with other indicators, such as the popular MACD, but RSI gives a more precise and clear divergence, which leads to higher quality trading. Here is an example of a large divergence within the oversold zone: And now an example of a large divergence near the oversold zone i.

RSI did not cross the line : Tight divergence Now we see the second type of divergence instead, the narrow divergence. We also draw the trendlines in the chart and highlight the divergence: The lows are close so it is a tight divergence.

To identify it more easily, we therefore use the linear graph and highlight the lowest low lower low on the graph and the highest low higher low on RSI: Here is another example comparing the charts: As you can see, it is much easier to identify tight divergences on a linear graph.

Such divergences, when used correctly, are just as important as large divergences. Now we show the case of divergence inside the central RSI zone close to the red line 30, but not touching it , as in the figure: In conclusion, here is a list based on the quality of the signal obtained from the divergences: Best.

The RSI can help you to profit from such situations. Most traders use the values of 70 overbought and 30 oversold , some also use 25 and 75 or 20 and When the market moves above the upper boundary, they consider the market overbought. Too many traders have bought the asset in the recent past, which means that supply will likely outweigh demand and the price will fall. When the market moves below the lower boundary, they consider the market oversold.

Too many traders have sold the asset in the recent past, which means that demand will likely outweigh supply and the price will rise. The second way in which traders use to RSI is to compare it to the current market trend. When an asset is trending, it develops continuously higher highs and lows in an uptrend or continuously lower highs and lows in a downtrend. These zig-zag movements are great trading opportunities because they can continue for a long time, which makes predictions easy.

If the market creates a new high in an uptrend or low in a downtrend , but the RSI fails to mirror this move, traders speak of a failure swing. Failure swings are strong signs that a trend is losing momentum and might end soon. Apparently, the market is no longer moving as quickly as before; the momentum that pushed the asset in a strong direction is gone.

Now, the trend will likely end, and the market will turn around. These are the two most popular ways of interpreting the RSI. Binary options allow you to trade the RSI with several strategies. They differ in risk, time requirement, and the number of created signals.

When the market reaches the oversold or overbought regions of the RSI, something is going on. Unfortunately, it can be difficult to pinpoint what exactly this something is. You should be careful before you blindly invest in a turnaround once the market reaches an extreme area.

This is all you need to invest. If the RSI has moved up for six periods and down for one, it is probably not yet moving downwards. Wait until there are enough periods to confirm the direction. Because the movement starts far away from the extreme value for its direction, this safety measure guarantees that there is enough room for a long movement to develop, which increases the chances of winning a binary option.

In any case, you should use a short to medium expiry. Since the market is currently moving in the right direction, there is no sense in waiting for things to change. Probably the safest way of trading the RSI is trading failure swings. Failure swings only happen when something is very wrong with a trend, and they are a sure indication of a turnaround.

Choose a long expiry. The market can go through a short sideways movement after a failure swing, and you want your expiry to be long enough to last until the market is going down. Once it is going down, it is likely to fall for some time, so it is better to err on the side of caution and choose a long expiry.

The RSI works best when the market is in a trend.

The Relative Strength Index RSI is one the most used indicators. This isn't due to some mystical power, but rather for its reliability even for binary options. Like all indicators, it is just a formula that calculates the relation between time and price. The RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses, based on the average of up and down close days, in an attempt to determine overbought and oversold conditions of an asset.

This indicator is an oscillator, meaning that it gravitates or oscillates around a center line - in this case the 50 level line. Oscillators are indicators that are best used in ranging markets, hence the two 30 and 70 levels. When the indicator crosses the 30 line from below, it gives a signal to call and when it crosses the 70 line from above, it gives a signal to put.

Oscillators like the RSI, however, can be used in trending markets as well. What better time to call than when the market is trending and the indicator tends to agree. Indicators should not be used alone.

Using them blindly will result in failure. Adjusting the indicator's parameters will not improve performance. It will, however, adjust its sensitivity. An RSI with a period of 5, instead of the standard 14, will make it quicker and it will respond with drawing sharper lines on the graph. Trade 15 minutes options using the 15 minute time frame of whatever chart you are using. Looking for divergence or convergence when using the RSI could also be a good idea when trading binary options.

Divergence basically means that, the tops or bottoms that the chart and indicator make do not match. Say a bottom on the chart is lower than the previous bottom on the chart, but the bottom that the indicator draws is higher than the first previous indicator bottom.

This mismatch is called divergence and indicates a possible reversal. After the divergence is recognized, a move up from below the 30 line will give a signal to call. Convergence is exactly the opposite, the bottoms or tops on the chart and indicator match and this indicates a continuation.

Using the RSI and relying solely on it is not recommended. Indicators are supplements to the chart, which is the primary source of information. The RSI will perform when the signals it gives correspond to the market conditions displayed on the chart. When they do not correspond, the signals will probably not be valid. FM Home.

The indicator window of the RSI is graduated from 0 to The RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses, based on the average of up and down close days, in an attempt to determine overbought and oversold conditions of an asset. Using the RSI and relying solely on it is not recommended. If the RSI has moved up for six periods and down for one, it is probably not yet moving downwards. We can open our position PUT.

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