Relative Strength Index (RSI) From Scratch
Hello, traders!
As you know, it’s rather difficult and, never the less, important task to define the «power» of price or it’s called momentum. However, many tools have been already invented to help traders. On of the most informative and easy-to-understand is Relative Strength Index.
The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a coin.Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.
How to use?
The most reliable way to use it is to define divergencies. If are not aware of what it is, use our cheat sheet to make your life easier.
However, there are some other ways like defining the probable price reverse, catching TA patterns like double head, head and shoulders and so forth, but it’s kinda difficult to find them.
As I have already said, it’s kinda ridiculous to use the only indicator to make strategy. You may Only use it as a tool that solve the specific problem like enter, closing, defining take profit and stop loss levels. Thus, guys, use it cleverly and build your profitable strategies.
As you know, it’s rather difficult and, never the less, important task to define the «power» of price or it’s called momentum. However, many tools have been already invented to help traders. On of the most informative and easy-to-understand is Relative Strength Index.
The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a coin.Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.
How to use?
The most reliable way to use it is to define divergencies. If are not aware of what it is, use our cheat sheet to make your life easier.
However, there are some other ways like defining the probable price reverse, catching TA patterns like double head, head and shoulders and so forth, but it’s kinda difficult to find them.
As I have already said, it’s kinda ridiculous to use the only indicator to make strategy. You may Only use it as a tool that solve the specific problem like enter, closing, defining take profit and stop loss levels. Thus, guys, use it cleverly and build your profitable strategies.
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