Hi again
been out for a bit, but hope you all have been successfull on this crazy market.
Today will talk about probably the most used Technical Indicator - RSI:
RSI is an oscilator that measures the speed of a price movement. It's a very good indicator to track on all timeframes and used to predict and confirm possible trend reversions. You'll have a lot of info to check on web, so I'll jump to how i use it for trading.
I use these simples rules:
If >70, is overbought. - carefull as a trend change may occur. think on selling if market falls
If <30, is oversold. - we can be reaching a bottom, cross with other info and prepare for entries.
Uptrend is usually given if RSI is between 40 and 90, being 40-50 the "support zone" - so, higher than this looks ok for longs. If decreasing, pay attention
Downtrend the 50-60 usually acts as support
Apart from giving this "over/under bought" situation, one of the most interessting info RSI gives is Divergencies vs Pricing. Try to spot bulllish or bearish divergencies, as that can indicate or confirm trend changes. On a future post will talk a bit more on that.
These rules shouldn't be followed blindly, important to confirm with price action and other indicators
Well, that's it for now, hope you enjoyed and follow me
Disclaimer: all the information is purely my personal interpretation on the TA concepts.
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