RMI Indicator

RMI Indicator

RMI Indicator For MT4 provides forex trading signals using momentum. Overbought oversold and divergence trading signals.

The RMI indicator for MT4 is an oscillator. The RMI – Relative momentum index is an improved version of the classic RSI – Relative Strength Index indicator. So, traders can use the RMI using similar trading strategies applicable to the RSI. Traders can use overbought and oversold trading conditions of the RMI as trading signals. Furthermore, the indicator also provides divergence trading signals and displays patterns like double bottom, double tops, and head and shoulders. So, technical forex traders can buy and sell using multiple trading strategies using this indicator.

The indicator works well in all intraday chart time frames and the daily, weekly, and monthly price charts. Moreover, both new and advanced forex traders can trade using the RMI indicator with ease. However, the RMI is more responsive than the RSI as it uses the momentum of a specific period. But RSI – relative strength index uses the price changes of two adjacent bars to calculate the indicator values.

RMI Indicator For MT4 Trading Signals

The above EURUSD H4 candlestick price chart shows the RMI indicator for MT4 in action. The indicator line and the overbought and oversold levels are in red. Moreover, the overbought and oversold levels are at 70 and 30 respectively.

If the indicator value moves above 70 levels it indicates that the prices are already overbought. So, forex traders should wait for the indicator value to cross below the 70 levels. Once the values reverse, traders can anticipate the prices to move lower. So, traders can place a SELL trade with a stop loss above the previous swing high. The best profit booking strategy is to hold the position until the opposite trading signal.

Similarly, if the indicator values fall below the 30 levels, it indicates that the price is in an oversold condition. Forex traders should wait for the indicator to reverse and move higher than the 30 levels. Once the 30 levels are breached traders can place a buy trade with a stop loss below the previous swing low. The best profit target in this strategy is to hold the position and book profits at the opposite trading signal.

The second trading strategy is to identify chart patterns like the double bottom, double tops, and head and shoulders. These patterns tend to alert the trader regarding an impending price move. So, forex traders can take action in advance.

The third trading strategy is to identify the divergence and buy and sell accordingly. If the price and the indicator move in opposite directions a divergence is formed. Divergence is a leading indicator and signals potential price reversals. Forex traders can identify divergence and trade profitably using the RMI indicator.

Conclusion
The RMI indicator for MT4 is the best alternative tool for forex traders using RSI. Traders accustomed to forex trading using the RSI will find much difference when applying the RMI indicator. The RMI is much more responsive than the RSI and provides all the trading strategies like the RSI. Additionally, forex traders can download the indicator for free and install it easily.