RSI Swing Failure Setup
RSI indices trading swing failure can be a very accurate technique for trading short term trading moves. It also can be used for trading longterm trends but it's best suited for short term trading especially for those traders that trade reversals.
The RSI swing failure swing trading setup is a confirmation of a pending market reversal. This trading swing failure setups a leading breakout signal, it warns that a support or resistance level in the trading market is going to be penetrated. This trading setup should occur at values above 70 for an upward trend and values below 30 in a downwards trend.
Swing Failure In an Upward Indices Trend
If the trading RSI Indicator touches 79 then pulls back to 72, then rises to 76 and finally drops to below 72 this is considered a failure swing trading RSI set-up. Since the 72 level is an RSI support level & it has been penetrated it means that price will and follow & it will penetrate its support zone.
In the trading example explained and illustrated below, the trading RSI indicator hits 73 then pulls back to 56, this is a support zone. The indicator then rises to 68 & then drops to below 56, thus breaking the support zone. The price then follows afterwards breaking it support zone. The trading RSI swing failure is a leading signal and it is confirmed when stock price also breaks it support zone. Some traders open trade positions once the swing failure is complete while other traders wait for price confirmation, either way it's for a stock indices trader to decide what work best for them.
RSI Swing Failure Setup in an Upward Indices Trend
Swing Failure In a Downward Indices Trend
If the trading RSI Indicator touches 20 then pulls back to 28, then falls to 24 and 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 Setup in a Downward Indices Trend
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