NOTÍCIAS FOREX

Structural cracks in the global economy emerged from the depths yesterday as investors fled almost every major asset class in unison. Bond yields around the world are surging, with those on US treasuries and European instruments rising to multi-year highs. In the US, 30-year treasury yields topped 5.33% on Tuesday, their highest since 2007, while German and French 10-year bonds saw their sharpest rise in over 15 years. Markets are demanding greater returns for holding long-term government debt due to inflation fears and increased geopolitical risk. It now appears as though negotiations between the US and Iran are back to square one, meaning extended high crude oil prices have to be factored into future economic forecasts. Rising oil prices mean higher prices across the board, creating additional inflationary pressures that many countries around the globe are already struggling to contain. US equities were unceremoniously abandoned, dragging the Nasdaq 100 to a 1.7% loss by the daily close, while the S&P 500 and Dow Jones dropped 0.7% and 0.2% respectively. Semiconductors incurred the biggest losses on Tuesday, which explains the divergence between the tech sector and the broader market. The major indices in Germany and France lost 0.8% apiece, while those in Japan crumbled 2.5%. Precious metals had no safe haven to offer. Gold traded $80 lower by the end of the day, while silver had forfeited the better part of 4% as yesterday’s session drew to a close. Shockingly, cryptocurrencies have actually performed well so far this week. Bitcoin has risen almost 3% since Monday and is currently challenging $65,000 per coin. The lack of progress in Iran is understandably driving crude oil prices higher, with Brent Crude tapping $92 per barrel yesterday while WTI lingered behind at $85. Saudi Aramco appears to have had enough with the sordid affair and has begun loading a number of very large crude carriers inside the Strait of Hormuz. The company has not done so in three weeks, and the development is somewhat unexpected, although given the fact that all other routes continue to present their own difficulties, it is hard to blame them. The lack of movement in foreign exchange markets over the last two days illustrates the global nature of the problem quite well. There is no obvious safe currency, hence no real FX flows. Most countries are in the same boat, and the boat has a leak. The dollar is completely flat going into today’s major news event, namely the FOMC minutes from the July meeting, which was one of the more interesting ones due to 9-3 vote split among board members. While there is nothing forward-looking about the release, market participants will nevertheless be eager to get a reading on the general mood at the Fed. The dollar currency index is currently idling around 99.6 at the time of writing. Meanwhile, the rout in Japanese and Korean stock markets picked up this morning exactly where it left off, with the Nikkei 225 immediately dumping 3% and the Kospi index plummeting 6% as soon as trading got underway in the Far East, demonstrating once again the heavy semiconductor weightings present in both indices. Potentially rough day ahead. #IRAN #FOMC #DXY About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

The hard part of a limit order is not understanding what it does. It is deciding which price to put it at. Place it too close to the market and there is barely a trade in it; place it too far away and you watch the move leave without you. That single decision is where most beginners get stuck, and it is what this guide is built around. By the end you will know how a limit order actually fills, exactly where buy and sell limits go relative to the current price, how one real GBP/USD trade works out in pips and pounds on each side, and what to do on the days your order never fills at all. A limit order executes at your specified price or better. A buy limit sits below the current market price, a sell limit sits above it, and both wait for the market to come to you. The trade-off is fixed: a limit order guarantees your price, never your fill. Want to place a limit order on a live chart while you read? A limit order is an instruction to buy or sell a currency pair at a specified price or better, rather than at whatever price the market happens to be showing right now. It works as an entry order when you want into a position at a particular level, and as an exit order when you want out at one. The trade-off sits at the centre of everything else in this guide: a limit order buys you price certainty and costs you fill certainty. You decide the price, and in exchange you accept that the market may never trade there. A limit order is one type of pending order, the family of instructions that sit waiting on the platform instead of executing straight away. Here is where it sits against the other two orders you will use most: The one distinction worth holding on to: a limit order gets you a better price than the market is offering, while a stop entry order deliberately takes a worse one to confirm a breakout is real. Same waiting mechanism, opposite intentions. Read more: Types of Forex Orders: Master the 7 Types Like a Pro A buy limit order sits below the current market price. You are not trying to buy now; you are waiting for the market to pull back to a level you have already decided is worth paying, and buying there instead. Here is one worked through completely. GBP/USD is trading at 1.3480. The last swing low sits at 1.3412, and price has already bounced twice from the 1.3410 to 1.3425 zone, so that band is where buyers have shown up before. The buy limit goes at 1.3428, just inside the top of that zone rather than at its exact edge. The stop goes at 1.3388, below the whole band, and the target at 1.3508, just under the prior high. That is 40 pips of risk against 80 pips of reward, a 1:2 ratio, and at £5 per pip it is £200 at risk to make £400, roughly 2% of a £10,000 account. Read more: What is a pip in forex trading? How to calculate and use it Four situations where a buy limit is the right tool, and why the price goes where it goes: I placed exactly the trade above on a Tuesday morning and then went out for the day. GBP/USD drifted lower into the London afternoon, filled me at 1.3428, and I did not see the fill until that evening. Two sessions later it tagged 1.3508. The entire value of that trade came from a decision made before the market moved, not from watching it. A sell limit order sits above the current market price. You are waiting for a rally into a level you consider expensive, and selling there, either to open a short or to take profit on a long you already hold. The same treatment on the other side. GBP/USD is trading at 1.3455. Price stalled twice around 1.3520 to 1.3540 earlier in the month, which makes that band the obvious place sellers are waiting. The sell limit goes at 1.3532, inside the band. The stop goes at 1.3568, above the whole thing, and the target at 1.3460, back near the current price. That is 36 pips of risk for 72 pips of reward, again 1:2, which at £5 per pip means £180 at risk to make £360. Three situations where a sell limit earns its place: That last point is worth stating plainly: the same sell limit does two different jobs depending on whether you hold a position. As an entry it opens a short; attached to an open long it closes the trade at your price. The mechanics are identical. Read more: What is a stop-loss order and how to set it Both orders wait for a better price. The only real difference is which side of the market they wait on, and what "better" means when you are buying versus selling. The rule underneath the whole table is short enough to memorise: buy below, sell above. A limit order always sits on whichever side of the market is more favourable to you, which is exactly why it may never get hit. Your order rests in the market until price reaches your level, then executes at that price or better. The "or better" half gets ignored constantly, and it matters: a buy limit at 1.3428 that gets filled during a fast drop can execute at 1.3424, handing you four pips of price improvement rather than slippage against you. Read more: What is slippage and how to avoid it in trading Now the honest part, because the interesting cases are the ones where nothing happens at all. The sell limit example above is one I actually missed. Price reached 1.3527, five pips under my order at 1.3532, reversed, and fell 90 pips over the next two days. My analysis was right and my order was wrong, because I had put it at the level I wanted rather than the level the market was likely to reach. That is the whole lesson of this section. So: a limit order guarantees the price and not the fill. If being in the trade matters more than the price you pay, that is what a market order is for, and it carries the opposite cost. Read more: Market Order Explained: How It Fills and When to Use It The flow below works on any platform, because the sequence of decisions does not change even when the buttons do. Most of the work happens before you touch the order ticket. Settle the pair and whether you are going long or short before anything else, because direction decides which side of the current price your order belongs on. Long means below the market, short means above it. Get this backwards and the platform will usually reject the order, which is at least a cheap way to find out. You can place a limit order on any currency pair your broker offers, but the pair decides how reliable that order is. On majors such as GBP/USD, EUR/USD and USD/JPY, spreads stay tight and price moves in small increments, so an order at your level usually gets a clean fill. On exotics such as USD/TRY or USD/ZAR, the spread can be 20 to 50 pips wide and price jumps in chunks, which means the same order can be skipped entirely or filled far from where you expected. Same instruction, very different odds. Ready to place your first limit order on a real chart? This is the decision the whole trade rests on, and it is not "type in a number you like". Find the structural level first: a prior swing high or low, or a zone price has reacted to more than once. Then place the order just inside that zone rather than at its outer edge. In the buy limit example, the zone ran from 1.3410 to 1.3425 and the order went at 1.3428, three pips above the top of it. Placing it at 1.3412, right on the old low, would look more precise and fill far less often, because price tends to turn a few pips before the exact level everyone can see. You are trading a slightly worse entry for a materially better chance of getting one. Put both on the same ticket rather than adding them after the fill. Limit orders fill when you are not watching, which is most of the point of using them, and an unprotected fill at 3am is not a trade, it is an exposure. Size the stop from structure, not from a round number. In the example the stop sat at 1.3388 because that was below the entire support band; a fixed 20 pips would have placed it inside the zone, where normal noise would have taken it out. The expiry, or time-in-force, decides how long the order waits. Pick it from the level you are waiting for: a few hours takes a day order, a level that may need days takes GTC, and an idea tied to a specific event takes GTD. Once submitted, the order sits in your pending list, where the price can be amended or the whole thing cancelled. Check it whenever the reason you placed it changes. This is where discipline earns its keep: do not let a three-day-old order fill you into a market you no longer agree with. If the structure that justified the level has broken, cancel it. The order does not know the chart has changed. One habit that pays for itself: place the limit price inside the zone, not on its exact tick. The trades you lose to a level that missed by 2 pips cost far more over a year than the few pips of entry you give up by sitting slightly inside. A limit order is the right tool when the price you get matters more than getting in at all. Three situations where that holds: There are four situations where a limit order is the wrong tool. In each one the order either misses the trade you wanted or fills you into a market that has already moved, so the table sets out what goes wrong and what to reach for instead. The pattern running through all four is the same: a limit order needs the market to behave in an orderly way. The judgement in one line is that the faster the market, the less a limit order can be relied on; the more structured the market, the more it is worth. Read more: What Is Spread in Forex? Formula, Calculation & Examples Used in the wrong place, a limit order does not simply fail to help. It creates losses of its own, and they are worth naming because none of them look like mistakes at the moment you make them. Every one of these comes from the same root: the order was treated as a decision in itself rather than as the execution of a decision already made. The order ticket is the last step, not the plan. Read more: What is liquidity in Forex and how is it measured Read more: What is a pending order and how does it work A limit order is an instruction to your broker to buy or sell a currency pair at a specific price or better. A buy limit order executes only at your set price or lower, while a sell limit order executes only at your set price or higher. It guarantees price control, but not trade execution. The key difference is that a limit order guarantees a specific price (or better) but does not guarantee execution, whereas a stop order guarantees execution (turning into a market order once triggered) but does not guarantee the final execution price. In short, one protects your price and the other protects your participation. A limit order is a good idea when price control is more important than fast execution. It lets you set a maximum purchase price or minimum sale price. However, it does not guarantee your trade will happen if the market price never reaches your target. How long a limit order lasts depends on the time-in-force setting you choose when placing the trade. It can expire at the end of the trading day, last for a few weeks or months, or remain active until you cancel it or it gets filled. The expiry table above sets out which setting suits which situation. The risk is not in the order type, it is in where you place it. A buy limit at a level with no structure behind it simply buys a falling market at a slightly better price. The second risk is behavioural: chasing the market with a market order after the limit fails to fill, which turns a missed trade into a bad one. It depends on whether you want the price or the fill. A limit order enforces patience, which suits beginners learning to wait for levels; a market order guarantees you are in, which matters when the setup is time-sensitive. The most common beginner mistake is using a limit order to chase a fast market, where it delivers neither. Three things are worth keeping from this. Buy below and sell above, because a limit order always waits on the favourable side. It guarantees your price and never your fill, so every order needs a plan for the day it does not trigger. And the limit price belongs inside a zone rather than on a single tick, because the market rarely respects the exact level you drew. A limit order cannot make a bad level good. It executes a decision you already made, which is exactly why the decision deserves more time than the order ticket does. The fastest way to make this concrete is to place two. Open GBP/USD on a demo account, set one buy limit below the market and one sell limit above it at levels you can justify, then check back in a week to see which filled, which died, and what the market did in between. The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Related concepts:

The ongoing turmoil in the Strait of Hormuz has forced shipping companies into exploring alternative trade routes in an effort to bypass the dangerous passage in and out of the Persian Gulf. Millions of barrels of oil are stuck in various Middle Eastern countries because the usual export pathways are closed off. Saudi Arabia has a trump card for this exact scenario in the form of its East-West pipeline, which allows for crude oil to be transported hundreds of kilometres over the desert to the other side of the country, to the Red Sea port of Yanbu. This allows shipping companies to bypass the Strait of Hormuz entirely, avoiding the dangerous waters close to the Iranian mainland and picking up the same cargo in relative safety. Saudi Aramco, the national oil company of Saudi Arabia, has encouraged ship owners to do just that, but there is a problem. Unfortunately, the Red Sea presents its own difficulties, namely the presence of Houthi rebels operating out of Yemen. Terrorism in the region has been a problem for a while already, and shipping companies are beginning to shun the secondary route just as they have abandoned the first. On the 20th of July, the Houthis announced a naval blockade of the Saudi Arabian coastline and threatened vessels attempting to load Saudi oil. In an effort to avoid detection, some shipping vessels are opting to turn off their transponders to avoid potential attacks, but such operations are risky and are by no means a long-term solution. The increased pressure has tempered international willingness to navigate the Red Sea, with many companies opting to walk away completely. Asian refiners traditionally buy Saudi crude oil according to free on board (FOB) terms, meaning the price they pay is the price to pick up the oil at the loading point; all transport and insurance costs are absorbed by the buyer. Saudi Aramco has been offering a discount to Asian buyers to partially compensate for the danger of navigating through dangerous waters, but it seems what little has been conceded is no longer enough. A number of Asian refiners are now refusing to pick up the precious cargo in Yanbu because they cannot find shipping companies willing to take on the job. Insurance premiums have also shot up over the past few months, further driving up freight rates in the region. According to recent reports, at least two refiners have requested to start loading crude oil at the northern Egyptian port of Sidi Kerir, located in the Mediterranean Sea. This would allow vessels to avoid both the Persian Gulf and the Red Sea, paving the way for a relatively safe route around Africa. Unfortunately, such a detour would add weeks to the normal journey time, greatly increasing transport costs for the refiner. Customers in Asia are understandably unhappy about the current situation, and although routing all Saudi oil through the Egyptian terminal is not a flexible enough solution to fully replace Yanbu, the different parties involved are running out of options. The tenuous peace deal between the US and Iran is looking more fragile than ever this week and tensions in the region are flaring up once again. Crude oil prices are likewise on the rise, with Brent Crude punching back above $90 per barrel on Monday. About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

If last week’s charts are anything to go by, a large percentage of traders are too busy lounging around the pool or frolicking on the beach to contribute anything towards financial markets. It is mid-August after all; who can blame them. Trading volumes on the NYSE and Nasdaq were far below yearly averages last week as holiday season entered full swing and trading desks reduced to skeleton crews. If there was one pivotal talking point to latch onto, it was the fact that the US economy showed a second consecutive month of cooling inflation, at least according to the latest CPI data. The deceleration in consumer price growth was hardly anything to write home about, coming in 0.1% lower than the previous month, the salient point is the direction of travel. Less inflation means less chance of an interest rate hike, and indeed interest rate traders reacted accordingly, swinging more heavily in favour of a rate hold in September and October, but still leaning towards one adjustment to the upside during the December FOMC meeting. The total lack of reaction in the US dollar was quite telling, suggesting that FX markets had largely pre-empted the shift over the prior two weeks. With that said, the greenback’s competitors have their own problems to worry about and the relative stability in the dollar currency index may be providing cover for broader turmoil. The euro is under pressure from the economic stagnation afflicting the European Union, while the yen remains at the mercy of low interest rates courtesy of the Bank of Japan. The Swiss National Bank has absolutely no interest in seeing the Swiss Franc appreciate in value either, turning global currency markets into a giant race to the bottom. Speaking of the yen, the joint intervention to prop up the Japanese currency has already begun to unwind, with USDJPY once again approaching 160. The DXY has remained under 100 points for most of August already and is once again on the back foot going into today’s session. Easing expectations on the dollar allowed risk-on sentiment to come to the fore-front last week; precious metals undertook a minor leg up with gold reaching $4,375 per ounce by Friday and silver closing just shy of $65. US stocks recorded modest gains overall, as the S&P 500 edged to a fresh all-time high on Thursday, while the Nasdaq 100 added 1% to its tally to close the week back above 30,000 points. Semiconductors were the driving force behind the rally, meaning the jubilation did not spread as far as the Dow Jones, which lost half a percent last week. The rebound in tech sent a number of companies flying, most notably Sandisk (SNDK), which exploded 35% higher, while Western Digital (WDC) and Micron (MU) gained 17% and 11% respectively. Dell Technologies (DELL) also continued to surprise markets last week by pushing 8% higher into unexplored territory. Not the most fascinating of economic calendars in the days ahead, but there are still a few events worth keeping an eye out for. Wednesday will see the publication of the latest batch of UK and European inflation data, both of which will factor into future interest rate predictions on their respective currencies, but the main event will be the release of the FOMC minutes covering the July meeting. Comments from different board members will be all the more interesting given that the gathering occurred before the most recent inflation reading. On Friday, currency traders will have to tune in to the July inflation figures in Japan, which will play into interest rate dynamics in the yen. On earnings calendar, Walmart (WMT) may be worth paying attention to on Thursday because it offers an independent glimpse into US consumer spending – a metric that fell sharply according to last Friday’s retail sales figures. With the macro calendar cleared, the spotlight may well return to geopolitics this week, as the US-Iran memorandum of understanding expires and diplomatic relations in the Middle East continue to sour. #IRAN #DXY #FOMC About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

The Relative Strength Index (RSI) is probably one of my favourite indicators that I use for trading. It is a momentum oscillator that moves between 0 and 100, measuring the speed and strength of recent price gains and losses. An RSI reading above 70 is generally considered overbought, while a reading below 30 is considered oversold. That sounds straightforward perhaps a little too straightforward. Many beginners see RSI fall below 30, assume the currency pair must be ready to recover and immediately open a buy position. They then watch, usually with growing discomfort, as the price continues falling and RSI remains oversold for far longer than expected. The problem is not necessarily the indicator. It is how the number is being interpreted. In this guide, I will explain what RSI means in forex trading and show how its formula works using a practical currency-pair calculation. We will also look at the RSI scale, the importance of the 50 midline, divergence signals and the settings traders can use for different trading styles. Most importantly, we will examine when RSI signals are useful, when they are misleading and why no reading should be treated as an automatic instruction to enter a trade. The Relative Strength Index (RSI) is a momentum indicator that measures the speed and strength of recent price movements on a scale from 0 to 100. A reading above 70 normally suggests that a currency pair is overbought, while a reading below 30 suggests it is oversold, although neither reading guarantees that the price is about to reverse. To start your trading journey, open an account trusted by traders all over the world. The Relative Strength Index (RSI) is a momentum oscillator developed by technical analyst J. Welles Wilder Jr. and introduced in 1978. It moves between 0 and 100, comparing the strength of a currency pair's recent gains with the strength of its recent losses. In plain language, momentum describes how quickly and strongly a price is moving. If EUR/USD has recorded several convincing upward closes, its RSI will generally rise. If falling prices begin to dominate, the indicator will move lower. RSI forms part of technical analysis, but it does not predict where a currency pair will go next. Instead, it helps you judge how forceful or stretched the recent price movement has become. Read more: Forex Technical Analysis: A Step-by-Step Beginner's Guide This distinction matters because an overbought reading does not automatically mean the price will fall. Equally, an oversold reading is not proof that the market has reached its bottom. RSI describes the condition of the move; it does not hand you the ending in advance. RSI measures the balance between upward and downward price momentum over a selected number of periods, with 14 periods being the standard setting. It is based on the relative size of recent gains compared with recent losses rather than the actual price of the currency pair. For example, GBP/USD trading at 1.3200 does not have a higher RSI simply because its exchange rate is higher than EUR/USD at 1.1600. The indicator only considers how each pair has moved during the chosen lookback period. When average gains are stronger than average losses, RSI rises. When average losses take control, it falls. A reading near 50 suggests the two sides are relatively balanced. You may also see price reach a new high while RSI fails to do the same. That disagreement can provide an early warning that the move is losing momentum, although we will examine this more closely in the divergence section. RSI follows the market's rhythm by comparing recent upward closes with recent downward closes. When rising candles are larger or more frequent, RSI moves higher. When falling candles begin to dominate, it moves lower. Imagine EUR/USD has been trading sideways between a clear support and resistance level. If the pair reaches the top of that range while RSI moves above 70, the reading may warn that buying momentum is becoming stretched. In a ranging market, this type of overbought or oversold signal tends to be more useful because price is already moving between recognisable boundaries. The situation changes when the market develops a strong trend. During a sustained rally, RSI can remain above 70 while the price continues climbing. In a steep decline, it can stay below 30 without producing an immediate recovery. For this reason, RSI extremes are generally more reliable in ranging conditions than in one-way markets. The indicator must always be read alongside the wider trend rather than treated as a standalone reversal signal. RSI is calculated by comparing the average gain with the average loss over a selected number of periods. The standard setting uses 14 periods. The formula is: RSI = 100 − [100 ÷ (1 + RS)] Where RS (relative strength) = average gain ÷ average loss An average gain is the total of all positive price changes divided by 14. An average loss is the total of all negative price changes, treated as positive values, divided by 14. The example below uses published GBP/USD daily closing prices from 14 July to 3 August 2026. We need 15 closing prices to calculate the 14 changes used by RSI. The total gains over the 14 periods were 351 pips, while the total losses were 315 pips. Dividing each by 14 gives an average gain of 25.07 pips and an average loss of 22.50 pips. Dividing the average gain by the average loss gives an RS of 1.114, and placing that into the formula produces an RSI of 52.70. An RSI of approximately 52.70 tells us that gains held a modest advantage over losses during this particular 14-day sequence. It does not, by itself, tell us that GBP/USD should be bought or sold. This example shows the initial calculation using simple averages. After that first value, Wilder's method smooths the previous averages as each new period is added. Your platform may therefore display a slightly different number depending on its price feed, candle closing time and earlier price history. Fortunately, MT4, MT5 and other trading platforms perform these calculations automatically. Understanding the formula is still worthwhile because it explains where the number comes from, why it rises and falls, and why one unusually large trading day can affect the reading. Read more: What is a pip in forex trading? How to calculate and use it Reading RSI involves two related skills. First, you need to understand what the different areas of the 0–100 scale suggest. You can then use the 50 midline to judge whether bullish or bearish momentum currently has the advantage. The RSI scale is normally divided into three broad zones. These zones provide useful information, but they should be interpreted as market conditions rather than automatic trading instructions. An RSI reading below 30 tells you that recent losses have been particularly forceful. It does not tell you that sellers have finished. Entering a buy position simply because the indicator reads 29 can mean stepping directly in front of a trend that is still gathering speed. The area between 30 and 70 is often described as neutral, although that description can be misleading. RSI holding between 50 and 70 can support a bullish trend, while repeated failures below 50 can confirm that bearish momentum remains in control. A reading above 70 indicates that recent gains have been unusually strong. The currency pair may be stretched and vulnerable to a pullback, but strong buying pressure can keep RSI overbought for days or even weeks. For this reason, overbought means that the move deserves closer attention, not that a sell order should be opened immediately. The 50 midline is one of the most useful parts of RSI, despite receiving far less attention than the familiar 70 and 30 levels. When RSI holds above 50, average gains are stronger than average losses, suggesting that bullish momentum has the advantage. When it remains below 50, recent losses are stronger and bearish momentum has the edge. This can be used as a simple trend filter: For example, suppose GBP/USD is making higher highs and higher lows while RSI repeatedly dips towards 50 before turning higher. Those rebounds suggest that bullish momentum is returning after each price pullback. Experienced traders often watch this behaviour more closely than they wait for RSI to reach 70 or 30. Extreme readings may be relatively rare, but the indicator's relationship with the 50 midline can provide a running view of market direction. As a result, the midline often gives RSI far more practical value than its overbought and oversold labels alone. There is no universal "good" RSI level. The most useful reading depends on whether the currency pair is trending upwards, trending downwards or moving sideways. A trader looking for a buy may initially think that an RSI below 30 is ideal. However, that reading could simply confirm that the pair is falling aggressively. In an established uptrend, a pullback towards 40 or 50 may provide a more useful reference than waiting for an oversold signal that never arrives. Technical analyst Constance Brown's work on RSI ranges helps explain how the indicator behaves differently according to the market's direction: This behaviour is sometimes called an RSI range shift. Instead of travelling evenly between 30 and 70, the indicator's typical operating range moves higher during an uptrend and lower during a downtrend. For example, imagine EUR/USD is rising steadily, and RSI has remained between 45 and 78. Each time the indicator falls towards 45, the price completes a modest pullback before buyers return. Waiting for RSI to reach 30 would produce no entry reference because the strength of the trend prevents it from becoming conventionally oversold. Anyone who treats 70 and 30 as the only RSI levels that matter can sit through an entire trend without seeing what they consider a valid signal. For this reason, a good RSI level is one that makes sense within the pair's current market structure, not simply a number taken from the trading textbook 101. One of the easiest RSI mistakes to make is buying an oversold currency pair while it is still in a clear downtrend. To illustrate the lesson honestly, consider the following first-person example as a reconstructed trade scenario rather than a claim about a verified historical position. I was watching GBP/USD fall on the four-hour chart. The pair had already formed a series of lower highs and lower lows, but when RSI dropped to 27, I convinced myself that the selling had gone far enough. I bought one standard lot at 1.2640, placing my stop-loss 40 pips lower at 1.2600. There was no bullish price confirmation and no established support level underneath the entry. My entire reasoning amounted to "RSI is oversold, so the price should bounce." It did not. GBP/USD briefly paused before continuing lower. RSI fell from 27 to 22, the price reached 1.2600 and the stop-loss closed the position for a 40-pip loss, approximately $400 on a standard lot, excluding trading costs. Read more: What is a stop-loss order and how to set it The problem was not that RSI had produced an incorrect number. The indicator had accurately shown intense bearish momentum. My mistake was treating oversold as another word for bottom. That is an important distinction. RSI can help you recognise changing momentum, but the way you enter and confirm a trade determines whether that information is genuinely useful. A more measured approach is to wait for RSI to leave the extreme zone before considering an entry. For a possible buy setup, that means allowing RSI to fall below 30 and then waiting for it to climb back above 30. The move back above the threshold suggests that selling pressure may be easing and that buyers are beginning to respond. The sequence looks like this: This approach does not remove the possibility of a losing trade. It simply prevents you from buying while bearish momentum is still accelerating. The same principle can be applied in reverse. If RSI rises above 70, waiting for it to cross back below 70 provides some evidence that buying pressure is weakening. Selling the moment RSI touches 70 means acting before that change has occurred. A cross back through the threshold is therefore evidence of a momentum shift, not proof of a reversal. If it happens in the middle of nowhere, against a powerful trend and without price confirmation, it remains a weak setup. In a strong uptrend, RSI may rarely fall below 30. Waiting exclusively for an oversold reading can leave you watching the entire move from the sidelines, which is very safe, admittedly, but not especially productive. The 40–50 zone often provides a more practical reference during bullish market conditions. As price pulls back, RSI declines from a higher reading towards the midline. If the wider trend remains intact, the indicator may find support between 40 and 50 before turning upwards again. A potential bullish trend setup may include: Suppose EUR/USD is trending upwards on the daily chart. RSI reaches 72 during a strong rally before price begins to pull back. Several sessions later, RSI falls to 46 while EUR/USD tests a previous resistance level that has now become support. A beginner may ignore the situation because RSI is nowhere near 30. A more experienced trader recognises that 46 can be entirely normal in an uptrend. If the price holds support and RSI turns back above 50, the combination may indicate that bullish momentum is returning. The crucial point is that the 40–50 zone is not a buy signal by itself. It becomes useful when the following conditions agree: The reverse applies in a downtrend. RSI may repeatedly rally into the 50–60 area before turning lower, while price forms lower highs beneath resistance. In that environment, waiting for RSI to exceed 70 may mean missing several legitimate trend-following opportunities. This is what separates a basic reading of RSI from a more experienced one. Beginners tend to ask whether the indicator is overbought or oversold. Experienced traders are more likely to ask where RSI is operating within the current trend and whether its range has shifted. RSI should not be used on its own. A signal carries more weight when it appears alongside an established support or resistance level, a clear price-action pattern or a widely followed moving average. For example, RSI crossing back above 30 is more meaningful if EUR/USD is simultaneously rejecting daily support. Without that additional context, the indicator is simply reporting a change in recent momentum, and that may not be enough to justify risking money. RSI provides the clue. Price structure and risk management decide whether the clue is worth acting upon. Read more: The best forex indicators every trader should use in 2026 RSI divergence occurs when price and the indicator move out of step, usually warning that the momentum behind the current trend is weakening. The signal develops because RSI measures the strength of recent gains and losses. Price may continue reaching a new extreme, but if the move is being made with less force, RSI may fail to confirm it. Divergence is worth noticing, but it is not an automatic reason to enter a trade. Fading momentum can continue for some time before price reverses, and sometimes the reversal never arrives. Bullish divergence forms when price makes a lower low while RSI produces a higher low. The lower price shows that sellers have pushed the currency pair to a new low. However, the higher RSI reading suggests that the downward move has less momentum than the previous decline. Selling pressure may therefore be weakening. For example, suppose EUR/USD falls to 1.0850 with RSI at 24. The pair then recovers briefly before declining to a new low at 1.0820. This time, RSI only falls to 32. Price has moved lower, but RSI has moved higher. This disagreement creates bullish divergence and warns that sellers may be losing control. A trader could then watch for additional evidence, such as: The divergence draws attention to the possible change. Confirmation helps determine whether the market is actually beginning to turn. Bearish divergence forms when price makes a higher high while RSI records a lower high. The new price high shows that buyers have pushed the currency pair further upwards. However, the lower RSI peak indicates that they have done so with less momentum than before. Buying pressure may be running out of steam. Suppose GBP/USD rallies to 1.3180 with RSI at 76. Following a small pullback, the pair rises again and reaches a higher high at 1.3220. RSI, however, only reaches 68. This is bearish divergence: price has strengthened, but the momentum reading has weakened. A trader may respond by watching for price to reject resistance, RSI to move back below 70 or the market to break beneath a recent higher low. Until price provides that confirmation, the divergence remains a warning rather than a complete trade setup. RSI divergence can fail repeatedly when a currency pair is trending strongly. A powerful uptrend may produce one bearish divergence, then another and perhaps a third, while the price continues reaching new highs. This happens because fading momentum does not necessarily mean that the opposite side has taken control. Buyers may be advancing more slowly, but they are still advancing. The same problem appears during a steep decline. Bullish divergence may suggest that selling momentum is weakening, yet the price can continue falling as each attempted recovery is overwhelmed. Trading every divergence signal can therefore lead to a series of premature counter-trend positions. To reduce that risk, consider: Divergence is best viewed as an early warning that a trend may be tiring. It tells you to pay closer attention; it does not tell you to press the entry button. The standard RSI setting is 14 periods, but it can be adjusted to suit different timeframes and trading styles. Shortening the period makes RSI react more quickly, producing more signals but also more market noise. Lengthening it creates a smoother indicator with fewer, steadier signals. A "period" refers to one candle on the selected chart. RSI 14 on a daily chart uses 14 daily candles, while RSI 14 on a one-hour chart uses 14 hourly candles. Read more: How to Read Forex Charts for Traders RSI 14 provides a reasonable balance between responsiveness and stability. It is sensitive enough to reflect changing momentum without reacting excessively to every minor price movement. For most beginners, the default setting is the most sensible place to start. It also makes chart analysis easier to compare because RSI 14 is widely used across the market. This does not mean it is automatically the best setting for every strategy. It simply provides a well-established baseline from which a trader can test alternatives. Reducing RSI to six, seven or nine periods makes the indicator more sensitive to recent price changes. It reaches overbought and oversold zones more frequently and reacts more quickly when momentum shifts. This responsiveness may suit day traders working with shorter timeframes, where opportunities develop and disappear rapidly. The cost is a noticeable increase in false signals. On a five-minute EUR/USD chart, for example, RSI 7 may cross above and below 30 several times during an unsettled session. Some crosses will reflect genuine changes in momentum, while others will simply be short-term price noise. A faster RSI does not necessarily provide better information. It provides more information, leaving the trader to filter a greater number of weaker signals. Increasing the period to 21 or more smooths the RSI line. Individual candles have less influence on the calculation, so the indicator takes longer to respond to changing prices. Longer settings may suit swing and position traders who are more interested in established momentum than brief intraday fluctuations. Signals occur less frequently, but they are less likely to be caused by a single erratic candle. The disadvantage is additional lag. By the time a slower RSI confirms that momentum has changed, part of the price move may already have taken place. The RSI period is not the only setting that can be changed. Traders can also adjust the standard 70 and 30 thresholds. In a clearly trending or volatile market, using 80 as overbought and 20 as oversold can reduce the number of premature counter-trend signals. These stricter levels require momentum to become more extreme before attracting attention. For example, RSI may repeatedly move above 70 during a strong GBP/USD uptrend without the price reversing. Raising the overbought threshold to 80 filters out some of these early warnings and focuses attention on more stretched conditions. The trade-off is that stricter thresholds produce fewer signals. A move may reverse before RSI reaches 80 or 20, so no setting removes uncertainty. Changing RSI settings should be based on testing rather than on trying to make the indicator fit a trade you already want to take. Start with RSI 14 and the standard 70/30 levels, record how they perform under your strategy, and only adjust them when the results provide a clear reason. RSI is useful because it makes momentum easier to read, but it cannot predict reversals or remove uncertainty from trading. Its weaknesses become particularly noticeable when market conditions change. There is always a downside in trading. The honest limitation is simple: RSI cannot tell you with certainty what price will do next. It becomes more useful when its reading agrees with the trend, market structure and a meaningful price level, but even then, the signal can fail. This is why risk management remains necessary on every trade. The Relative Strength Index tells you how quickly and strongly a currency pair's price has recently changed. It acts like a speedometer for momentum, moving between 0 and 100 to highlight when buying or selling pressure may have become unusually strong. A high RSI reading shows that recent gains have been stronger than recent losses. A reading above 70 is normally considered overbought, but it can remain elevated during a strong uptrend and does not guarantee an immediate price reversal. In MT4 or MT5, open the Indicators menu, select Oscillators and choose Relative Strength Index. RSI will appear in a separate window below the main price chart, with 14 periods normally used as the default setting. RSI stands for Relative Strength Index, a momentum oscillator introduced by J. Welles Wilder Jr. in 1978. It measures the speed and size of recent price changes on a scale from 0 to 100. A common RSI buy signal occurs when the indicator falls below 30 and then crosses back above 30, suggesting that selling pressure may be easing. The signal should still be supported by factors such as price support, bullish confirmation and the wider trend. RSI can be applied to any currency pair and timeframe because its underlying calculation remains the same. However, false signals and market noise tend to increase on very short timeframes and less-liquid currency pairs. Major economic releases can move prices sharply and push RSI into an extreme zone within moments. Overbought and oversold readings carry less meaning during this volatility, so it is often better to wait for the market to digest the news before interpreting RSI again. RSI is one of the most widely used momentum indicators in forex trading, largely because it presents complex price information in a simple 0–100 reading. However, using it effectively requires more than waiting for the line to reach 70 or 30. There are three key points to remember: RSI divergence, midline crosses and range shifts can all add useful context, but none of them guarantees a successful position. The indicator is based on past prices, can lag during fast markets and may produce repeated false signals when a trend is particularly strong. For this reason, RSI should support a trading decision rather than make the entire decision for you. Practising on a demo account allows you to observe how the indicator behaves across different currency pairs, timeframes and market conditions without risking real money. Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Related concepts:

They say good news comes in threes, but in the case of US inflation data, markets will have to settle for only two. Wednesday’s CPI publication fell perfectly inline with predictions, with headline and core year-over-year readings falling to 3.5% and 2.5% respectively in July. The lack of surprise translated into very little movement across financial markets, in what is turning into a rather dull week for traders. The bigger surprise arrived with the PPI release the following day, as producer prices remained steady in July, with an overall inflation rate of 0%, while the core element showed price appreciation of 0.2% from the prior month; both figures fell short of expectations. The general inflation picture is suddenly looking a lot less pessimistic. The rebound in crude oil prices in July does not seem to have spilled over to consumer or producer prices, and the US has now observed two consecutive months of cooling. While current inflationary pressures remain above the Fed’s target of 2%, the central bank may not feel the need to act quite so hastily following the last two days of economic data prints. The implied odds of a rate hike on the dollar have fallen once again, this time nearing a 66/33 split in favour of a hold during the next meeting in mid-September. The next real inflation test will arrive at the end of August in the form of the PCE price index, a gauge more heavily favoured by the Federal Reserve anyway. Putting on the tin-foil hat for a minute, if one were to manufacture the conditions for an end-of-year rate cut, this is almost exactly how one would go about doing so. US labour data weakened last week, although not too alarmingly, then inflation data started to show signs of cooperating, against expectations. Markets have been primed for months now about the growing threat of inflation, and the Fed has made it abundantly clear that it intends to combat such dangers. With that in mind, this week’s mundane print looks comparatively more promising. Afterall, the Fed does not have to wait until the inflation rate falls all the way down to the official 2% target before acting; if signs point in the right direction, the board can justify easing off a little. Very convenient. The sense of optimism was enough to lift the S&P 500 to a fresh record high on Thursday, while the Nasdaq 100 climbed back over 30,000 points for the first time since June. The dollar itself has not undergone any significant moves in either direction over the past two weeks, with the DXY content to remain just shy of the 100-point level. A healthy degree of profit-taking occurred in precious metals yesterday, dragging gold down to $4,350 per ounce and silver down to the $64.50 range. Oil markets have mellowed out somewhat this week; the Brent Crude index sank marginally lower to $87 per barrel yesterday while WTI contracts fell as low as $80; still very little progress on the Iran front. The Nikkei and Kospi indices opened strongly this morning as trading got underway in Asia, maintaining the momentum seen in semiconductor stocks over the last couple of days. Cryptocurrency traders are equally bored with the current state of affairs, as Bitcoin remains almost stationary around $64,000 per coin. At least the SEC had something to contribute to the conversation this week, stating that rules for certain digital assets may be pushed forward with or without the US Senate’s approval. The Clarity Act is dead in the water until September at the very earliest, but that may not stop regulators from exploring other means to achieve their goals. The SEC is scheduled to discuss such matters later today, where members will consider whether to "create a tailored offering regime for certain investment contracts involving crypto assets”. The body may also provide details on a possible legal exemption for tokenised stocks, something that the crypto industry has been working towards for many years already. #CPI #PPI #SEC About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.