The RSI composite signals indicator for MT4 works on the RSI (Relative Strength Index) principle.
This RSI version fluctuates between 1.1 (overbought) and 0 (oversold) values and consists of a dual colored signal line.
- A blue RSI composite signal line represents a buy signal.
- A brown RSI composite signal line represents a sell signal.
The RSI composite indicator does its analysis on the current time frame or any other time frame of your choice.
The time frame option can be accessed from the indicator’s inputs tab (choose from M1 up to monthly).
It’s recommended to combine RSI-type technical indicators with a trend-following indicator.
Then trade RSI composite signals in the direction of the underlying trend as follows:
- Trade the blue RSI composite buy signal line when the underlying trend is up.
- Trade the brown RSI composite sell signal line when the underlying trend is down.
Feel free to experiment with the different indicator’s inputs settings to suit your needs and preferences.
Free Download
Download the “Composite Rsi 1.9.ex4” MT4 indicator
Indicator Chart (EUR/USD H1)
The EUR/USD H1 chart below displays the RSI Composite Signals Metatrader 4 forex indicator in action.
Basic Trading Signals
Signals from the RSI Composite Signals MT4 forex indicator are easy to interpret and goes as follows:
Buy Signal: Open a buy trade when the RSI composite signal line changes its color from brown to blue.
Place a stop loss below short-term support or use your own preferred SL method.
Sell Signal: Open a sell trade when the RSI composite signal line changes its color from blue to brown.
Place a stop loss above short-term resistance or use your own preferred SL method.
RSI Composite + Algorithmic Megatrend Forex Day Trading Strategy
This MT4 day trading strategy combines the RSI Composite Signals indicator with the Algorithmic Megatrend indicator.
The RSI Composite indicator gives entry signals: a blue line means a buy signal, a brown line means a sell signal.
The Algorithmic Megatrend shows the dominant market trend via a histogram: blue bars for bullish trend and red bars for bearish trend.
This strategy is built for day trading on higher time frames like M15, M30, and H1.
It is ideal for traders who want to harness both momentum and trend strength in their trades.
The RSI Composite gives actionable entries, while the Megatrend confirms that you trade in the direction of the major trend.
Buy Entry Rules
- The Algorithmic Megatrend histogram must be blue, showing a bullish trend.
- The RSI Composite indicator must cross or generate a blue signal.
- Enter a buy trade when both conditions align.
- Place the stop loss below a recent swing low, e.g., 20–30 pips, depending on pair and timeframe.
- Set the take profit target in the 30–70 pip range or use a trailing stop once in profit.
Sell Entry Rules
- The Algorithmic Megatrend histogram must be red, showing a bearish trend.
- The RSI Composite line must turn brown (sell signal).
- Enter a sell trade when both conditions align.
- Place stop loss above a recent swing high, e.g., 20–30 pips, depending on the currency pair and timeframe.
- Set take profit around 30–70 pips, or trail the stop for large trending moves.
Advantages
- Dual confirmation reduces false entries: momentum + trend.
- Flexible exit strategies: fixed targets or trailing stops.
- Works on multiple timeframes and currency pairs.
- Helps capture the day’s major trend moves rather than scalping noise.
- Better risk-to-reward potential due to larger targets compared to scalping.
Drawbacks
- The strategy may lag in fast-moving markets.
- There is a risk of whipsaw when the RSI Composite signal reverses quickly.
- If the Algorithmic Megatrend flips frequently, trades may be taken against inertia.
- Requires larger stop losses, which can increase risk.
- Trailing stops may be triggered prematurely in volatile conditions.
- Needs strong discipline to avoid overtrading when signals are weak.
Case Study 1 — AUD/USD on H1
On the AUD/USD H1 chart, the Algorithmic Megatrend histogram turned blue, signaling a strong bullish trend.
Meanwhile, the RSI Composite moved into its blue buy zone and generated a buy signal.
A long trade was opened. The stop loss was placed 40 pips below a recent swing low.
Over the next few hours, the price advanced strongly as the trend continued, and a trailing stop was used to lock in profits.
The trade closed with a 90-pip gain as the RSI Composite later reversed.
Case Study 2 — NZD/JPY on M30
On the NZD/JPY M30 chart, the Algorithmic Megatrend histogram was red, indicating bearish trend pressure.
Soon after, the RSI Composite generated a brown sell signal.
A short position was opened with a stop loss 35 pips above a recent swing high. Price dropped steadily in line with the trend.
The take profit was set at 80 pips, and as the move stretched, a trailing stop was implemented to maintain profits.
The trade ended with a 75-pip gain when the histogram began to fade.
Strategy Tips
- Use fundamental analysis to avoid trading during high-impact news events, which can invalidate signals.
- Always confirm that the Megatrend has been stable for a few bars to avoid false trend entries.
- When volatility is lower, reduce your position size or widen stops slightly to adapt.
- Backtest the strategy on your broker’s data for your chosen currency pairs to find optimal stop and profit levels.
- If the RSI Composite signal comes too early (before the trend confirms), wait one candle for confirmation rather than trading immediately.
- Combine with a higher timeframe analysis (for example, H4 or daily) to ensure that you are trading in the direction of a bigger trend.
Download Now
Download the “Composite Rsi 1.9.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (time frame to use, RSI calculation period, RSI calculation depth, price to use, alerts)Width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly, Monthly
Type: RSI signals
