MA & RSI Order Blocks Price Action Trading Strategy (Forex and Stock Trading)

MA & RSI Order Blocks Price Action Trading Strategy – The indicators we use in this strategy are Simple Moving Average (SMA) and RSI. The best SMA combination for order blocks is the 200-period SMA, 100-period SMA, and 50-period SMA. These settings are widely used among big traders, automatically making our analysis of order blocks more effective.

As for RSI, we use the 8-period RSI because it’s moderate and can read market trends and momentum more accurately compared to other RSI settings. However, in this strategy, RSI is only a supporting factor, not the main consideration.

So, the next step is to analyze the indicators.

• 1st. If the 50-period SMA is above the 100-period SMA, and the 100-period SMA is above the 200-period SMA, the market is assumed to be in a strong bullish condition.

• Conversely, if the 50-period SMA is below the 100-period SMA, and the 100-period SMA is below the 200-period SMA, the market is assumed to be in a strong bearish condition.

• 2nd. If the 100-period SMA is above the 200-period SMA while the 50-period SMA is below the 100-period SMA or 200-period SMA, the market is in a weak bullish condition. In this strategy, we shouldn’t open any positions.

• 3rd. Conversely, if the 100-period SMA is below the 200-period SMA while the 50-period SMA is above the 100-period SMA or 200-period SMA, the market is in a weak bearish condition. In this strategy, we also shouldn’t open any positions.

These RSI rules are common among all traders:

• 1st. If the 8-period RSI is above the level of 50, the market is assumed to be in a bullish condition. If in this condition, the RSI line is facing upward, it’s considered a strong bullish market. If the RSI line is facing downward, it’s considered a weak bullish market.

• 2nd. If the 8-period RSI is below the level of 50, the market is assumed to be in a bearish condition. If in this condition, the RSI line is facing upward, it’s considered a weak bearish market. If the RSI line is facing downward, it’s considered a strong bearish market.

As I mentioned earlier, the RSI analysis is supplementary. The primary focus is on SMA trend analysis, order blocks, and price action entry.

• Download “TraderVersity-MoneyFlowIndexSystem” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-MoneyFlowIndexSystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-MoneyFlowIndexSystem” trading  system and strategy
• You will see “TraderVersity-MoneyFlowIndexSystem” is available on your Chart

On this chart, we can clearly see the first analysis rule. It’s about the established market trend. The 50-period S.M.A is above the 100-period S.M.A, and the 100-period S.M.A is above the 200-period S.M.A. So, right now, the market is assumed to be in a strong bullish condition.

Here, we can clearly observe the formation of an order block that we need to monitor closely because this block is below the strong bullish zone. Then, the price moves downwards for two reasons.

1. (First), the trend might change to bearish, or
2. (Secondly), it could be a market retracement.

Since the S.M.A formation shows strong bullish signs, we continue assuming that the market is strongly bullish, and the downward price movement is just a temporary retracement before continuing its bearish trend.

As expected, at the order block area, a candle forms a bullish engulfing pattern.

This is the best time to enter the market after a perfect bullish engulfing forms. Then, after the bullish engulfing forms perfectly, we open a BUY position on the next candle and place a stop loss below the engulfing candle. Because this is a high probability signal, our minimum profit target is twice the risk.

As anticipated, the price then rises quickly, giving us maximum profit.

This proves that the combination of order blocks and indicator analysis offers a high probability of winning because it combines indicators, order blocks, and price action. All analysis techniques are integrated into this strategy. Therefore, it’s reasonable that trading techniques like this are highly relied upon by successful traders.

In this chart, we can clearly see the first rule of analysis: the market trend is established. The 50-period Simple Moving Average (SMA) is below the 100-period SMA, and the 100-period SMA is below the 200-period SMA.

So, the market is assumed to be in a strong bearish condition.

Here, we can clearly identify an order block formed under the strong bearish zone. Then, the price moves upward for two potential reasons:

1. (First), A change in trend to bullish, or
2. (Secondly), A market retracement.

Because the SMA formation indicates a strong bearish trend, we maintain the assumption that the market is in a strong bearish condition. The upward movement is considered temporary before continuing its bearish trend.

As expected, at the order block area, a candle forms a bearish pin bar. This is the best time to enter the market after the bearish Pin Bar forms perfectly. After the bearish pin bar forms perfectly, we open a SELL position on the next candle, placing a stop loss above the long tail pin bar. Since this is a high probability signal, our minimum profit target is twice the risk.

This combination of order blocks and indicator analysis offers a high probability of winning because it combines indicators, order blocks, and price action. All analysis techniques are integrated into this strategy. Therefore, it’s reasonable why trading techniques like this are heavily relied upon by successful traders.

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