Have you ever heard of RSI Channels? Most traders will probably say no. Drawing channel lines in the RSI part of the chart probably seems ineffective. What can you say? Walter Baeyen feels there is a reason, and rightly so at some point, although RSI, as an independent trading system that primarily uses differences and reversals, is a concept that should not exist before learning to trade with the Relative Strength Index.
Based on the above, it may be appropriate for the trader to learn to draw a channel in the RSI once he starts to strengthen at the inputs and outputs. One of the interesting concepts about pull channels in RSI is that the channels act contrary to what most traders think would make sense. RSIs dominate the movement schedule.
As prices on the trading map move downwards, the RSI channels rise or rise. The RSI follows these channels until it reaches a certain level in the RSI, and then moves down the bottom of the lower channel to the lower RSI and forms a new channel. These channel lines tilt from left to right along the trading schedule at the bottom of the table. Each time a channel penetrates, the price continues to fall.
Something similar happens on the rising trend chart. Here, the channels in the RSI decrease and as the price increases, the RSI moves upwards and creates a new channel on top of the old channel. As new channels accumulate in this way on top of the old, prices will rise. These channels tilt from right to left below the graph.
The interesting aspect of RSI channels is that the separation and return signals along the channels are converted into entry or exit points. For example, if there are a reversal signals and the price moves downwards, and then stops create a new channel, the trader may want to exit. However, as the RSI temporarily rises, it can jump from the top of the RSI channel and find an excellent place to re-enter the market at an instant of market pace.
A forex trader can make excellent trading decisions based on various signals and tools using RSI tools that are very unknown to many traders. RSI channels are just one of the tools.