Trading Indicators: RSI indicator

Trading Indicators: RSI indicator

Among the indicators used to do this, certainly the Momentum are among the most popular.

Beginning with some practical considerations RSI indicator, we can say that most of the time that you apply this indicator to our technical analysis, it is considering a period of 14 days. The longer the time period, in fact, less sensitive daren’t CSR. So a period of 14 days is definitely the best.

It 'important to realize also that CSR requires at least 90 periods of data to provide valid results. Otherwise, the formula does not give precise results for trend analysis. For those who do intraday trading, you need at least 200 days of data in order to begin to trust the validity of CSR.

The RSI shows us areas of overbought and oversold ones. Each time the value of the indicator is considered above 70, and then we are overbought, while any time below 30 is oversold. One thing to remember is that each oscillator, RSI included in a strong market trend will remain overbought or oversold for a while 'time. At these levels it is recommended to consider the first value as 80, not 70, and the second value to 20, not 30.

The biggest advantage of using an RSI chart is to highlight a difference between these graphs and the behavior of prices. While prices indicate a bullish divergence when price makes a new low, CSR continues to be below the value of 30 and fails to make a new low. When the values exceed the previous maximum IHR IHR itself, in the short term, there is a buy signal. Similarly, the event would be the opposite in case of bearish divergence.