If there is a strategy that has one of the best and most useful features on a Forex and Stock Market Chart, why not use that useful feature with some other trading strategy? Since the Ichimoku Cloud Trading Strategy got a high win rate after testing 100 Times, and a good TR Score on the Trading Rush Channel, why not use the Cloud from the Ichimoku Cloud, which filters and shows the trend direction, with the RSI indicator?

In a normal RSI Trading Strategy, you buy at the RSI oversold area and sell at the overbought RSI area. But in a trend, you most likely don’t buy when the RSI says oversold, and you don’t sell when the RSI says overbought. Because, even your cat knows that when the price is in an uptrend, the RSI overbought area no longer holds a strong value. Similarly, when the price is in a downtrend, the RSI oversold area does not mean it is a strong buying opportunity. In reality, many people think the opposite. Instead of selling when the RSI reaches the overbought area in an uptrend, it is a sign of a strong buying pressure in the direction of that uptrend. Similarly, instead of buying when the RSI reaches the oversold area in a downtrend, it is a sign of strong selling pressure in the direction of that downtrend.

That’s good and all, but to increase the win rate of this RSI Strategy, we need more than just a 200 period moving average. We need to filter the false RSI signals that will appear in the slow and range market and an indicator that confirms the strong short-term trend in the direction of the long-term trend.

That’s where the Cloud from the Ichimoku Cloud comes into play.

Here’s how the Ichimoku Cloud and RSI Trading Strategy goes.

When the Ichimoku Cloud is green in color above the 200 period moving average, only look for long RSI signals. When the RSI line crosses above the overbought level of 70, it’s a long entry signal only if the entry candle is above the cloud. Stoploss goes below the pullback.
Similarly, when the Ichimoku Cloud is red in color below the 200 period exponential moving average, only look for short RSI signals. When the RSI line crosses below the oversold level of 30, it’s a short entry signal only if the entry candle is below the cloud. Stoploss goes above the pullback of the trend.

By taking short trades only below the red cloud, and long trades only above the green cloud, we are looking to take more signals when the price is in a good trend like these. And are trying to filter the false signals that appear in the slow-moving markets.

To find the win rate of the Ichimoku Cloud RSI Trading Strategy, we will take 100 Trades with it in the next video.