The Power of Combining RSI with Institutional Supply and Demand Analysis 📈

In the world of trading, success often comes down to having the right tools — and knowing how to use them together. Over the years, through careful study of the CFTC data and countless hours analyzing price behavior, one truth has become clear: understanding institutional supply and demand alongside the RSI indicator offers a significant edge in today's markets.

Many traders rely solely on technical patterns or fundamental news, but they often miss the deeper story unfolding behind price movements. Institutions — the real heavyweights of the financial world — leave their fingerprints on the market through their positions and trading behavior. By studying supply and demand levels and tracking institutional buying and selling activity through tools like the CFTC data, we can get a strong sense of where the market is truly positioned to move.

However, timing entries and exits purely off supply and demand levels can still be tricky. That’s where the Relative Strength Index (RSI) comes in. When combined with institutional analysis, the RSI acts as a precision tool to fine-tune entries and exits:

✅ Clearer Context: RSI readings provide insight into the strength (or weakness) behind a move into supply or demand zones.

✅ Confirmation: If price rallies into a supply zone but the RSI only reaches around 60 (rather than becoming truly overbought), it tells us the move is weak — a clear signal that the zone is more likely to hold.

✅ Early Warnings: Divergences in RSI can offer early signs that momentum is shifting before price action alone would reveal it.

✅ Better Patience: Watching RSI build structure allows traders to wait for high-probability opportunities, avoiding rushed decisions.

For example, in recent weeks, we closely monitored the U.S. Dollar Index and spotted early signs of institutional buying through CFTC data. By using the RSI on the 4-hour and daily charts, we were able to time a beautiful long entry on USD/CHF, catching the move almost

perfectly. Without the RSI, the entry would have been much more difficult to time. Now, as the RSI climbs well above 60, we know to start watching for signs of a retracement, matching what’s developing on the higher time frames.

Similarly, in gold, despite critics saying CFTC data has little relevance, we have seen clear evidence of institutional sentiment shifting: long positions are decreasing, short positions are slowly increasing, and RSI readings on the weekly chart are approaching oversold territory. These combined clues often precede major slowdowns and eventual reversals in momentum.

In short, the RSI is not meant to be used alone, nor is institutional supply and demand analysis. But when combined, they create a powerful synergy that gives you a clearer view of market dynamics, better timing, and higher-probability trades.

If you're serious about elevating your trading, mastering the dance between these two tools can be a real game-changer.

Here’s to trading smarter, not harder! 🚀

Kevin Araujo