How to use RSI index indicator
In 1978 James Welles Wilder developed The RSI indicator index. RSI index or relative strength index is one of oscillator indicator because this indicator oscillates between lower and upper level bounds. RSI index indicator is used to read forex price momentum. RSI index indicator oscillator is fixed from 0 to 100, and just like all oscillator indicators it shows oversold and overbought signals. In Forex trading channel , the RSI relative strength index oscillator indicator is mos powerful. Trending forex price tend to twist oversold and overbought signals because RSI indicator reading will be separated from center line "50".
How to use RSI index indicator ?
Using RSI index indicator is very simple. Sell or short determined to be RSI indicator levels of 70 or greater ( the forex market is in overbought condition ). Buy or long determined to be RSI indicator levels of 30 or less ( the forex market is in oversold condition ).
RSI index indicator formula calculation
The formula of RSI forex indicator is as follows:
RS = (average stock change on up days / average stock change on down days)
The RSI index forex indicator calculation formula is as follow :
RSI = 100 - ( 100 / 1 + RS )
Market price is regarded oversold if the indicator RSI forex reaches the 30 level and you should considered buying. when the forex market is a strong bear market then 20 level could be a good level. And if market price is regarded overbought if the Forex indicator RSI index reaches the 70 level and you should considered selling . when the forex market is a strong bullish market then 80 level could be a good level.
The relative strength index forex indicator is a best indicator in momentum trading. The RSI index indicator can help you make a profits. But , RSI index indicator is not a decision forex indicator , sometimes RSI can gives u=you false buy and sell signal.
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