Many traders like to trade divergences on RSI. Divergences although important to trading are better used as clues to RSI Reversals. Divergences signal retracement momentum while Reversals signal trend continuation momentum.

Finding them all.

In the first 15 days of August 2010 there were 31 reversals on the EURUSD hourly chart alone. Those 31 reversals totaled over 2200 pips had they all been taken as trades. That means two signals each day on average and over 70 pips average profit on every trade. Most traders would not be able to find them all in particular if they were trying to keep their eye on three, four or five currency pairs.

If you could make 70 pips on a successful reversal pair it would be nice to know when they occur. It would be even better if the computer could automatically alert you to when they did occur.

The RSI Paint Indicator

Realizing that these signals were so frequent it was necessary to program the RSI indicator to find and draw them on the trading chart for the trader. This is what the RSI Paint Indicator does. It locates reversals which are powerful signals that tell the trader that momentum is shifting back toward the trend.

In addition, the RSI Paint Indicator takes the same signal and transfers it on to price so that it becomes an objectively drawn trend line that can be used for resistance or support.

Not only that, the RSI Paint Indicator draws divergences as well so that the trader can follow when they are signally a momentum slow down. RSI divergences lead to RSI reversals which are the bread and butter of trading the RSI.

Last and best of all, the RSI Paint Indicator alerts the trader no matter how many currency pairs he or she is watching so that they are able to do other things that are more valuable than watching the computer every minute of the day.

When the RSI Paint Indicator is taken together with The RSI PRO Forex Trading System, the Forex trader will find areas of weakness in the market for highly profitable trades and the system can be used as a complete standalone trading method.

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