Accelerator Oscillator and RSI Indicator
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In this video tutorial, we will combine the Accelerator Oscillator and RSI Indicator.
The main use of the RSI is to identify overbought and oversold conditions in the market.
We will use the 50 level as the trigger point for buy or sell signals.
If the market is coming from below 20 and moving past the 50 level that that’s the trigger to buy for the RSI.
Conversely if it has past the 80 level and come back down to the 50 level, then that triggers a sell signal.
The problem with the RSI indicator is that it is a lagging indicator.
Hence, it’s always good to use another indicator for confirmation.
And we will be using the Accelerator Oscillator for confirmation for the buy or sell signals generated by the RSI indicator.
So assuming that the RSI is coming down past the 50 level, that is a sell signal generated.
But we will get confirmation from the Accelerator Oscillator and what we want to see is also a red bar below the Zero line.
And to also have a red candle bar.
The final confirmation comes from the resistance level.
We want to sell only when the price is hitting the resistance level and not sitting on the support level.
If these criteria are met, then we have a confirmed sell signal.
Likewise when it comes to buy signals.
We follow the same process.
First, we make sure that the RSI is coming from below the 20 level and moving upwards pass the 50 level.
That triggers the RSI buy signal.
Then we look for confirmation in the Accelerator Oscillator.
We want to see confirmation by having a green bar above the Zero line.
Next, on the price bar, we want to see a green candle bar.
And lastly, we confirm this buy signal when the price is above the resistance line.
4 step simple process to confirm a solid buy signal that you can confidently execute.
Trade well and stay safe.
See you on the next video.
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