RSI MA Indicator for MT4

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RSI MA Indicator for MT4

Introduction to the RSI MA Indicator

Momentum reversals are telltale signs of a possible trend reversal. This is why many traders look for momentum reversal indications as a trade confirmation.

The RSI MA Indicator is a tool that traders could look into as a momentum reversal signal indicator.

What is the RSI MA Indicator?

The RSI MA Indicator is momentum indicator which is based on the Relative Strength Index (RSI) and an underlying Exponential Moving Average (EMA).

It is an oscillator type of indicator which has a line that oscillates within the range of zero to 100. The line it plots is very reactive and tends to shift in the opposite direction very quickly.

RSI MA Indicator for MT4

How the RSI MA Indicator Works?

The RSI MA Indicator has an algorithm which basically compares its underlying Relative Strength Index indicator with a preset Exponential Moving Average.

If its RSI line has a higher value than the EMA, then the indicator would plot a line that would first cross towards the middle line, then it moves further above 80.

Inversely, if the RSI line has a lower value than the EMA line, then it would plot a line that goes down to the middle area, then below 20 if momentum persists.

How to use the RSI MA Indicator for MT4

The RSI MA Indicator allows traders to adjust the sensitivity of the indicator within its indicator settings. The “RSI Period” variable adjusts the sensitivity of the indicator by modifying the number of bars the indicator would use to detect momentum reversals.

How to use the RSI MA Indicator for MT4 - Buy Trade

The RSI MA Indicator is a very sensitive momentum indicator. With this characteristic, the RSI MA Indicator can be used as a confirmation of a momentum reversal or as an entry trigger to a bigger picture trade setup. It is also best that the momentum reversal signal would be in confluence with a candle with strong momentum.

Buy Trade Setup

When to Enter?

Identify a bullish trade setup based on price action or price patterns. Open a buy order on the confluence of the RSI MA line crossing above 80 and a bullish momentum candle. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as soon as price action shows signs of a bearish reversal.

How to use the RSI MA Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Identify a bearish trade setup based on price action or price patterns. Open a sell order on the confluence of the RSI MA line crossing below 20 and a bearish momentum candle. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as soon as price action shows signs of a bullish reversal.

How to use the RSI MA Indicator for MT4 - Sell Trade

Conclusion

The RSI MA Indicator is a very erratic momentum indicator. It tends to crisscross and make new signals on the slightest hint of a short-term trend reversal or momentum reversal. This makes it unsuitable to be a standalone trade signal. However, it does tend to work well when traded merely as a trade entry confirmation based on momentum in confluence with other trade setups.

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RSI MA Indicator for MT4

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