Relative Strength Index ( RSI ) is an indicator which is calculated based on change of close in inspected period. RSI indicator is used in a short or medium term. Although terms change according to user’s preference, extension of term causes to being unresponsive to price movements. RSI generally is used with reference value 30 and 70. RSI indicator is used commonly in two ways. First of them, and the most common one is level 30, and gold is evaluated as oversold, and level 70 and more is evaluated as overbought. According to this approach, curve of RSI less than level 30 exceeds this level, and that is buy signal. Curve of RSI indicator more than level 70 lessen this level again, and that is sell signal. Another approach uses discordance between price and RSI indicator.
Generally, RSI indicator moves with price graph. But it can move against to trend in price graph from time to time. For example, if RSI indicator in upward trend is inclined to decrease, that is selling. If RSI indicator in degressive trend is inclined to increase, that is buy signal.
- Date: 03 December 2016 Sat 22:27
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