Preparing the template
Choose currency pairs for trading: EUR/USD, GBP/USD, AUD/USD, USD/CHF, EUR/GBP. Why these? Because pairs with USD and EUR are the most popular on the market and most transactions are conducted with them. And this affects volatility and the “workability” of strategies.
The recommended time frame is from 15s to 1m.
How to configure the RSI
In the lower left-hand corner in the “Indicators” tab, select the RSI and configure the following settings:
- Period 8
- Overbought 70
- Oversold 30
How to conclude UP trades
1. We wait for the RSI to fall below the level of 30 and form there 2 minima, and the second must be higher than the first:
2. In the “Tools” tab, select “Beam” and conduct a beam from left to right directly through the minima on the RSI. This gives us the line of the uptrend.
3. On the chart, we put a beam through the corresponding minima in the same way. We also get a trend, but a downward one:
5. We conclude an UP trade for 1-5 minutes.
Important! If both beams are pointing upwards this is not convergence! We do not conclude a trade!
How to conclude DOWN trades
1. We wait for the RSI to rise above the level of 70 and form there 2 maxima, and the second must be lower than the first.
2. In the “Tools” tab, select “Beam” and conduct a beam from left to right directly through the maxima on the RSI. This gives us the line of the downtrend.
3. On the chart, we put a beam through the corresponding maxima in the same way. We get a downtrend:
4. Look at the screenshot above: the upper beam is pointing upwards, and the lower one is pointing downwards. Draw imaginary lines continuing the beams and they will disperse. This is called divergence and it speaks to an immintent reversal.
5. We conclude a DOWN trade for 1-5 minutes.
Important! If both beams are pointing downwards this is not divergence! We do not conclude a trade!
P.S. With experience you will be able to conclude more profitable trades, as you will learn to identify inconspicuous, at first glance, market convergence/divergence, which usually indicates sharper, stronger and longer corrections and reversals.
Here is an example of strong convergence:
And here is strong divergence: