Learn RSI Part 1 : Basic of Relative Strength Index
Hello Traders,
I am back with the new educational concept. You may have often heard the word "RSI"
We are going to study about RSI : "Relative Strength Index", which is the most used indicator.
RSI is the price following indicator and it provides important levels from 0 to 100.
The important levels of RSI are 40-60, 70-30 and 50
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Why do we practice RSI?
There are a few reasons for using the most important indicator.
1.) It provides over bought & oversold levels.
If RSI goes above level 70, we can say it has "overbought" and if RSI goes bellow level 30 we can say it has "oversold"
Q.1 What is oversold & overbought?
A: These two terms are extreme level when the price reaches this level, reversal is possible
So shall we travel further? YES! Cool!
2) RSI gives us the direction of where the trend is going!
I have added level 50 as an important level.
So, if the price is below level 50, we can say that atmosphere is bearish and if price is above level 50 we can say that atmosphere is bullish.
In short, Bearish below level 50
Bullish below level 50
It is better to draw a horizontal line at level 50, to have a check on it easily!
We will continue the series it will cover the divergence and many more indicators.
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If you have any doubts, you can put them in the comment section below.
I am back with the new educational concept. You may have often heard the word "RSI"
We are going to study about RSI : "Relative Strength Index", which is the most used indicator.
The important levels of RSI are 40-60, 70-30 and 50
-------------------------------------------------------------------------------------
Why do we practice RSI?
There are a few reasons for using the most important indicator.
1.) It provides over bought & oversold levels.
If RSI goes above level 70, we can say it has "overbought" and if RSI goes bellow level 30 we can say it has "oversold"
Q.1 What is oversold & overbought?
A: These two terms are extreme level when the price reaches this level, reversal is possible
So shall we travel further? YES! Cool!
2) RSI gives us the direction of where the trend is going!
I have added level 50 as an important level.
So, if the price is below level 50, we can say that atmosphere is bearish and if price is above level 50 we can say that atmosphere is bullish.
In short, Bearish below level 50
Bullish below level 50
It is better to draw a horizontal line at level 50, to have a check on it easily!
We will continue the series it will cover the divergence and many more indicators.
---------------------------------------------------------------------
If you have any doubts, you can put them in the comment section below.
