Trade Stock Indices

RSI Swing Failure Setup

The RSI index swing failure is an accurate tool for short-term trading moves. While it can also be applied to longer-term trends, it is most effective for short-term strategies, especially for reversal traders.

The RSI swing failure swing setup tells you that the market price is likely to change direction. This trading setup is a signal that a breakout is coming, and it warns that a support or resistance level is going to be broken through. This should happen when readings are above 70 for an uptrend and below 30 in a downtrend.

Swing Failure In an Upwards Indices Trend

When RSI hits 79, pulls to 72, climbs to 76, then falls under 72, it forms a failed swing. The 72 acts as support, now broken. Price should follow and smash its own support.

In the trading example that is explained and shown here, the trading RSI goes up to 73 and then goes back down to 56, which acts as a support level. Then, the indicator goes up to 68 and then goes back down to below 56, breaking the support level. After that, the price also goes down, breaking its support level. The RSI swing failure gives an early signal and is confirmed when the stock price also breaks its support area. Some traders start trade transactions once the swing failure is done, while other traders wait for the price to confirm it: either way, it's up to each stock indices trader to choose which method works best.

Identifying RSI Swing Failure Setups in Both Upward and Downward Trends

RSI Swing Failure Setup in an Upward Indices Trend

Swing Failure Setup In a Downward Indices Trend

If the trading RSI Technical Indicator touches 20 then pulls back/retraces to 28, then falls to 24 & finally penetrates above 28, this is considered a failure swing setup. Since the 28 level is an RSI resistance level & it has been penetrated it means that price will and follow & it'll penetrate its resistance level.

RSI Swing Failure in Downtrends - RSI Failures in Up and Down Trends

RSI Swing Failure Setup in a Downward Indices Trend

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