How I Use RSI to Trade Weak Stocks to the Downside

by | May 27, 2022 | Stocks

I filmed a video last week on how to trade pullback stocks to the upside just like I do in my Sniper Trader Pro strategy, which I must add has helped me win the last 20 out 22 closed trades since October 2021… 

But what I didn’t tell you is that there’s more than one way to trade pullbacks… 

We can trade them to both the upside and downside. 

Since the feedback from that video has been fantastic, I thought it would be beneficial for me to hop back into the trading room to show you the other half… or how to trade pullback stocks to the downside

How to Trade Pullback Stocks to the Downside

Learning how to trade pullback stocks to the downside is critical because when there’s a bearish trend in the market, like there is right now, it gives us an edge since we’re able to find opportunities in stocks that look ready to drop. 

The first thing I do is flip my Cumulative Strength scan on its head… 

What I mean by that is I switch my scan to show me the weakest stocks at the top and the strongest at the bottom. 

For those of you who don’t know, I use my CSI scan as a barometer for the broader market. It helps me gauge the major indexes to find the hottest stocks to go long and the weakest ones to short. 

When I do this, you’ll notice that Etsy Inc. (Nasdaq: ETSY) is the weakest stock on the list and that it’s been selling off. 

Weakest stocks on CSI scan (how to trade pullback stocks to the downside)

So then what I do, as shown in the image below, is add a five-day relative strength index to Etsy’s stock chart because shorter oscillators tend to work a lot better for me than longer ones, like 14 days. 

Stock chart of ETSY (how to trade pullback stocks to the downside)

When we’re in a deep downtrend, all we need to look out for is when the RSI goes above 70, or into what most consider overbought territory. 

That’s when I’d buy a put option.

Check out my short video above to get another example of how to trade pullback stocks to the downside

Don’t forget to like and subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video, and see what other trade opportunities we’re paying close attention to! 

P.S. Traders need confidence now more than ever… 

And confidence usually comes with a solid trading strategy, which is why I’ve decided to reveal my “Zip Trades” plan that I’ve been following to smash the stock market in a volatile 2022.

It’s the same plan I used to nail an 84.8% win rate on active signals from Oct. 12, 2021, through May 19, 2022…

And it’s had an average return per position — including winners and losers — of 8.49%, holding each trade an average of 21 days!

No BS here… No creative accounting…

Just a trading plan that’s crushed it so far in 2022!

Give this a try! 

WRITTEN BY<br>Roger Scott

WRITTEN BY
Roger Scott

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