Dynamic Zone RSI Indicator

The Dynamic Zone RSI Indicator is a technical analysis tool for forex that combines the RSI with two floating bands. The indicator appears in a separate window underneath the main trading chart. The bands function similarly to support and resistance. Adding it to your trading system may be worth a shot. It is appropriate for all timeframes and currency pairs. The input tab allows you to change the default indicator settings. Feel free to play around with the settings and parameters to suit your needs.

What is the Dynamic Zone RSI Indicator?

Dynamic Zone RSI is a widely used indicator among regular Forex traders, it may be seen as a good Forex Indicator due to its obvious entry and exit signals as well as the market momentum state. It focuses on market trends, particularly the current market momentum. This indicator gives its users a lot of flexibility. Newbie traders may find it beneficial to utilize at trading charts due to its clear demonstration and ease of usage.

Setting up the Dynamic Zone RSI Indicator
Setting up the Dynamic Zone RSI Indicator

Dynamic Zone RSI Strategy

This indicator plots the signal in a much more straightforward manner than some trend-following tools. If the Dynamic RSI passes the upper blue channel, it indicates a bullish trend and signals a buy signal. If it crosses the lower green channel, it indicates a sell entry and confirms the presence of negative momentum. When the Dynamic Zone RSI plots the opposite signal of the trade entry, the exit time is considered for both buy and sell entry.

Buy Signal

The following could be your checklist for a buy trade:

  • When the green indicator line crosses above the upper blue line.
  • When a bullish candle is formed at the same time.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when the green indicator line crosses the lower orange line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Dynamic Zone RSI Indicator Buy Setup
Dynamic Zone RSI Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the green indicator line crosses below the lower orange line.
  • When a bearish candle is formed at the same time.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when the green indicator line crosses the upper blue line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Dynamic Zone RSI Indicator Sell Setup
Dynamic Zone RSI Indicator Sell Setup

Dynamic Zone RSI Pros & Cons

Pros

  • The Dynamic Zone RSI Indicator may be used for divergence trading.
  • This indicator can inform the traders on probable overbought and oversold regions.

Cons

  • There are still a fair number of erroneous crossovers when using the Dynamic Zone RSI Indicator.
  • The aspect of divergence may require some level of experience to use optimally.

Conclusion

The Dynamic Zone RSI indicator is well worth adding to your trading toolbox but keep your expectations in check. It, like any other technical analysis tool, is not capable of generating 100% correct indications. As a result, it will occasionally send out erroneous signals. Its performance will be highly variable depending on market conditions. You are free to create your own trading method based on it.

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