RSI - Relative Strength Index is one of the principal indicators which is used while transacting in Forex market. RSI is frequently followed by traders thanks to ease of use and success of signal. We will mention that what is RSI?, and How is used and construed on platform?
RSI (Relative Strength Index) is an indicator which was published by J. Welles Wilder in 1978. Basically, RSI ensures to determine on overbought and oversold areas. Also it ensures to guess about direction.
This indicator, which is frequently used while making technical analysis, is demonstrated by a mark between 0 – 100. It is compared as percental by calculating days in which made overbought and oversold according to numbers between two values. Using and construing of these values, which is automatically calculated on Forex Meta programs, is quite easy from the stand point of investors. We can easliy construe and make a profit when basic logic is known.
Features of RSI Indicator
RSI is added on platform with revised condition according to 14 days period. But if you want, you can change these period values according to your investment strategy. Two numerical values 30 and 70 is seen on indicator. Prices,which occurred between these two values, are construed according to prices, which are remarked with mark. Level 70 is intersected as downward, and it signs that prices might decline. So, it gives SALE signals.
Level 30 is intersected as upward, and it signs that prices might increase. So, it gives PURCHASE signal.
Construing RSI Indicator:
We said that RSI indicator are successful at determine overbought and oversold areas. Now, we will look at how we construe that.
Indicator approaches to level 70, and it shows that purchase is excessive. Also, downward returns might happen.
Advancing towards level 30 means that sale is excessive, and upward returns might happen.
It is necessary observing well to not make mistakes.
For example, when level 70 is intersected as upward, making a loss is possible if sale is entered in case of continuation of increase
Because of these reasons, it is necessary to wait for a while when mark 70 is exceeded. And again, we need to watch out that level 70 is broken as downward. Same situation is valid for purchase decision which happens under mark 30.
The indicator, which is easy to use, is frequently preferred by investors, because it is clear, and it gives real-like guess.
If you want, you can also determine level 50 in addition to mark 30 and 70. You need to choose features of RSI after right click with mouse. After that, you need to pass on Levels and write 50 in Add colon. By this means, you can see average level of prices and decide to make a new transaction, or you can be informed of out of current transaction.
- Date: 23 December 2016 Fri 19:41
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