Technical Indicators
- Average True Range
- Bollinger Bands
- Linear Regression
- Moving Average Convergence/Divergence (MACD)
- Momentum
- Moving Average
- Parabolic SAR
- Relative Strength Index (RSI)
- Standard Deviation
- Stochastic
Relative Strength Index (RSI)
Relative Strength Index (RSI) is a price-following oscillator that ranges between 0 and 100. There are 3 distinct zones in the chart of this indicator: Upper overbought zone. from 70% to 100%; Lower oversold zone. from 0% to 30%; Middle zone. from 30% to 70%.
Methods of usage
- If the top of RSI was formed in the upper zone (overbought zone 'Right' 70%) and then the indicator returned to the middle zone, the price would move in the same direction
- If the bottom of the RSI was formed in the lower zone (oversold zone 'Left' 30%) and then the indicator returned to the middle zone, the price would move in the same direction.
- Divergence: when price reaches a new minimum/maximum, but is not confirmed by a new minimum/maximum on the RSI chart, the price correction takes place in favor of the direction of RSI.
Note: On the RSI chart levels of support/resistance and reversal patterns are sometimes visible more distinctly than on the price chart.
