RSI 60/40 Rule

Learn the RSI 60/40 Rule, an advanced technical indicator strategy that offers an alternative to the traditional 70/30 RSI. Understand its application.

Published · Updated · Methodology: Technical Indicators

Part of: RSI Strategies

  • Methodology: Technical Indicators
  • Content type: educational

Indicators used

  • RSI

Source video

Decoded from: Advanced RSI Trading Strategy | Why 70/30 Fails & How to Use 60/40 Rule by ICFM - Stock Market Institute — watch the original

Strategy overview

The Relative Strength Index (RSI) is a momentum oscillator plotted on a 0–100 scale, and by convention traders mark 70 as overbought and 30 as oversold — this strategy's whole argument is that those two lines mislead you and should be pulled inward to 60 and 40.

Decoded from ICFM – Stock Market Institute's video "Advanced RSI Trading Strategy | Why 70/30 Fails & How to Use 60/40 Rule", the angle is a threshold recalibration rather than a new indicator. The claim is that in a market that is genuinely trending, RSI frequently never reaches the classic 70 or 30 extremes — or reaches them so late that the move is largely spent — so signals built on those lines arrive behind price. Moving the reference levels to 60 and 40 reframes RSI from a counter-trend, overbought/oversold trigger into a trend-alignment filter: the question becomes which side of that tighter band momentum is holding, not whether an extreme has been touched.

Worth being clear about what this is and isn't: it is a fixed shifted threshold, not a volatility-adaptive band that flexes with the market. No mechanical entry, exit or RSI-period rules were extracted from the source video — the settings behind the 60/40 logic are the institute's to walk through — so this page frames the concept and the channel's "why the standard levels fail in trends" reasoning rather than a rule-by-rule breakdown.

Topics

rsi strategy · 60/40 rsi rule · technical indicators · trading strategy · pine script · rsi trading · advanced rsi strategy · tradingview strategy · indicator strategy

Frequently asked questions

What is the RSI 60/40 rule?

It replaces RSI's traditional 70/30 overbought/oversold lines with 60 and 40 as the key reference levels, using them as trend-alignment markers rather than as counter-trend extremes.

Why does the video argue the 70/30 rule fails?

The premise is that in trending markets RSI often doesn't reach 70 or 30, or only reaches them once the move is nearly over, so signals based on those extremes come late. The 60/40 band is offered as a tighter reference that reacts to momentum shifts earlier.

What RSI period does this strategy use?

The source video does not state a specific RSI lookback period; it centers on the 60/40 threshold concept rather than a fixed period setting, so any period would need to be chosen and tested by the trader.

How can I test the RSI 60/40 rule myself?

Since no mechanical rules were extracted here, treat it as a concept to define and backtest yourself — set your RSI reference lines at 60/40 and evaluate it against historical data before risking capital. Strategy Decoder extracts the structure of strategies like this from video sources so you can study and test them on TradingView.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

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