The following chart is a 7500 tick per bar chart od the USDJPY pair ofr most of the day of 6-6-16.

It is a pretty good example of how important the RMI is to my trading.

The RMI is a proprietary indicator developed over many years of market analysis. It was shown to me by my friend and fellow trader James Barnett – and the version I use today is only modestly changed from James’ original developed many years ago. It consists of two oscillators plotted over the price bars without axis values. It is used to place those horizontal lines on my trading charts at the beginning of the trading week. On the chart below the RMI is shown as the yellow and blue lines plotted over the price bars.

In general, when the RMI is below price bars the market is likely heading down – conversely when the RMI reverses and moves above price the market is likely to be heading up. This info, along with the horizontal lines, representing areas of support or resistance, gives me an edge in trading.

USDJPY_7500 ticksperbar_6_6_16.jpg

Figure 1 USDJPY-7500 tock bar 6-6-16

I made three trades based on the above chart. Two are closed and open is still open. Study the chart and see if you can figure out what those trades might be. In the paragraph below I will tell you, but here is a clue – I do not like to be short the pair at this point in time, so all trades were long.

 

Trade one: I went long as price approached the cyan support line at 107.184 – I figured that price would bottom soon and a nice retracement would happen.

Unfortunately I was wrong – the market continued going down. At the support of 106.559 I decided that the market was absolutely about to reverse – so I doubled down and went long again.

Look at the RMI between the first two trades.

Closed both of those trades later in the day for a nice profit and I am long again – probably will hold it over night with a stop somewhere around 107.300.

I can’t imagine trading without my RMI.

Maybe it is time you gave it a try – it is available for TradeStaion from our products page.

 

 

 

 

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