RSO is short for Relative Strength Oscillator, and the RSO Metatrader 4 Indicator is an oscillator variant of the traditional RSI indicator.
The indicator has a readable symmetry and is more suitable for comparison.
The levels that are present on the RSO Indicator are plus/minus 20 and/minus 50, where the former represents overbought/oversold levels and the latter depicts extreme-overbought/extreme-oversold regions.
The colored bars that are added to the RSO Indicator are just for clarity’s sake.
The lime bars are used to illustrate increasing RSO, while the red bars show decreasing RSO.
When the RSO is above +20, the first red bar that pops up reveals a possible change in direction.
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Indicator Chart (USD/CAD M15)
The USD/CAD M15 chart below displays the RSO Indicator Metatrader 4 forex indicator in action.
Basic Trading Signals
Buy Signal: Go long when the histograms (red & lime) of the RSO Indicator Metatrader 4 forex indicator gets aligned above the zero center line.
Sell Signal: Go short when the histograms (red & lime) of the RSO Indicator Metatrader 4 forex indicator gets positioned below the zero center level.
Exit buy trade: Close all buy orders if while a bullish trend is ongoing, the dodger blue curve of the RSO Indicator dips below the plus 20 level after hovering above it.
Exit sell trade: Close all sell orders if while a bearish trend is running, the dodger blue curve of the RSO Indicator breaks above the minus 20 level after staying below it.
Tips: There are sessions where the RSO Indicator fails to break above/below the plus/minus 20 levels respectively, it is okay to also exit orders when the dodger blue line dips below or breaks above the zero center line.
RSO + Forex Trend Filter MT4 Day Trading Strategy
This day trading method uses the Relative Strength Oscillator (RSO) together with the Forex Trend Filter MT4 Indicator.
The RSO histogram gives simple directional signals.
When the histogram is above zero, it suggests buyers are in control. When it drops below zero, it signals selling pressure.
The Trend Filter shows broader trend direction using blue bars for buy trend and red bars for sell trend.
When both indicators share the same direction, day traders get clear and structured setups that avoid unnecessary noise.
This strategy works well on M15, M30, and H1 charts.
It suits day traders who prefer stable setups rather than constant scalping.
It works best on liquid currency pairs such as CADJPY, NZDUSD, EURGBP, and AUDCAD.
These pairs provide steady intraday movement and enough volatility for clean signals while maintaining manageable spreads.
Buy Entry Rules
- The Trend Filter must show blue bars to confirm a bullish environment.
- The RSO histogram must move above the zero line to confirm upward momentum.
- Open a buy position when both conditions align.
- Place a stop loss below the most recent swing low. On M15 and M30, this is usually 8 to 15 pips. On H1, this can be 15 to 25 pips.
- Take profit at a two to one or three to one reward to risk ratio or exit when RSO begins to weaken toward the zero line.
Sell Entry Rules
- The Trend Filter must show red bars, which confirms a bearish trend.
- The RSO histogram must fall below the zero line, which confirms downward momentum.
- Open a short trade when both conditions match.
- Place a stop loss above the nearest swing high. On M15 and M30, this is typically 8 to 15 pips. On H1, this can be 15 to 25 pips.
- Target a two to one or three to one reward to risk ratio or close when RSO begins moving upward toward zero.
Advantages
- Clear directional structure because trend and momentum must agree.
- Suitable for day trading without overwhelming signal frequency.
- Reduces false signals by filtering out trades that go against the main trend.
- Works well on multiple timeframes, giving flexibility to traders.
Drawbacks
- In sideways markets, the RSO may give weak signals.
- It may require patience because good alignment does not happen constantly.
- Stop loss placement depends on volatility and may be large on H1 charts.
- May miss early reversals because confirmation requires both indicators to agree.
Case Study 1: CADJPY H1
During the Tokyo to London transition, the Trend Filter displayed steady blue bars.
The RSO histogram crossed above zero shortly after a small pullback. A long entry was triggered.
A stop loss was placed 18 pips below the swing low.
Over the next few hours, CADJPY advanced with consistent momentum.
The trade reached a 42 pip target, which was slightly more than a two-to-one reward to risk.
The position was closed when RSO began flattening, and the price slowed near resistance.
Case Study 2: NZDUSD M30
Later in the day, the Trend Filter turned red, showing bearish pressure.
The RSO histogram followed by dropping below zero, which confirmed a momentum shift.
A short entry was executed with a stop loss 12 pips above the previous swing high.
NZDUSD moved downward in a clean wave during the US morning session.
The take profit at 30 pips was reached comfortably.
The RSO began rising again afterward, so the exit was timed well.
The trade delivered close to a two and a half to one reward to risk.
Strategy Tips
- Wait for both indicators to line up in the same direction before entering a trade. This reduces noise and keeps you aligned with the dominant trend.
- Avoid trading when the RSO histogram hovers around the zero line. This often signals choppy price action with no clear direction.
- Focus on sessions with higher liquidity, such as London and New York, to get stronger and cleaner intraday swings.
- Use a fixed risk per trade to keep your day trading consistent. Position sizing is as important as the entry setup.
- When the Forex Trend Filter changes color, always reassess open trades. A color switch often warns of a weakening trend.
- On news-heavy days, wait for volatility to settle before taking new signals. Day trading works best in stable conditions.
- Look for price rejection zones, such as previous highs and lows, to validate the direction shown by the indicators.
- Use a trailing stop once the trade moves into profit to capture extended trend moves without guessing the final target.
Download Now
Download the “rso-indicator.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (RSO Period), width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend | oscillator
