Ever heard of RSI channels? Most traders would probably answer no. Drawing the wavelengths of the RSI part of the graph may seem fruitless. After all, what is the point? Walter Baeyen's sense of the cause is there, and at some point he is right, though this is a concept that should not precede learning how to trade RSI, Relative Strength Index, as an independent trading system , which primarily uses deviations and reversals.
Once a seller has begun to capture entrances and exits based on the above, it may be convenient for them to learn how to draw RSI channels. One of the interesting concepts behind RSI television broadcasting is that the channels are moving in the opposite direction to what many marketers think would be logical. The predominant movement of RSIs is in graphs.
When prices move down in a trading chart, RSI channels rise or rise. RSI follows these channels until the RSI reaches a certain level, and then they move downstream of the lower channel to the lower RSI and form a new channel. These wavelengths beneath the chart go from left to right. Each time the channel penetrates, the price continues to go down.
Such is the case in the chart of rising prices. Here the RSI channels go down, and as the price goes up, the RSI goes up and creates a new channel, but above the old one. As the new waves lean on the old, this price will go up. These channels slide down from the bottom right of the chart.
Interestingly, RSI channels are the signals that diverge and reverse along the channels, becoming entry or exit points. For example, if the reverse signals and the price move down and create a new wave, then it stops, the seller may want to quit. However, once the RSI is temporarily elevated, it can jump on top of the RSI channel for the momentum of the market, creating a perfect place to return to the market.
Using RSI tools, which are largely unknown to many traders, the Forex trader can make excellent trading decisions based on a variety of signals and tools. RSI channels are just one of the tools.