RSI (Relative Strength Index)

RSI = Relative Strength Index

Is fluctuates between 0 and 100

·         A momentum Oscillator

·         Increasing RSI when: Average gains are greater than average losses = Bullish

·         Decreasing RSI when: Average gains are less than average losses = Bearish

How to use:

1.       Trend recognition: trading in the direction of the trend

1.1   Above 50: Uptrend

1.2   Below 50: Downtrend

2         Overbought and oversold entry signals.

2.1   In an uptrend look for oversold areas and open a long trade after the pullback above 30.

2.2   In a downtrend look for overbought areas and open a short trade after the pullback below 70.