Relative Strength Index Indicator – Analysis & Forecasts – 17 December 2022

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RSI Indicator Explained – What is RSI Indicator?

The “Relative Strength Index” or “RSI” indicator is a popular member of the “oscillator” family of technical indicators. J. Welles Wilder developed the RSI to measure the relative changes between high and low closing prices. Traders use the index to determine overbought and oversold conditions, valuable information when setting entry and exit levels in the forex market.

The RSI is classified as an “oscillator” because the curve fluctuates between zero and 100 values. The indicator usually has lines drawn with values ​​of “30” and “70” as warning signals. Values ​​beyond “85” are considered a strong overbought condition or “sell” signal, and if the curve falls below “15”, a strong oversold condition or “buy” signal is generated.

CSR Formula

The RSI indicator is common in Metatrader4 trading software, and the calculation formula sequence includes these straightforward steps:

Choose a predetermined “X” period (the default value is “14”, although a value of “8” or “9” is more sensitive);

Calculate “RS” = (Average of “X” periods ends/Average of “X” periods ends;

RSI = 100 – [100/(1 + RS)]

The software programs do the necessary calculation work and generate the RSI indicator as shown in the lower part of the following chart:

The RSI indicator has a single volatility curve.

Large spikes in price swings can cause the RSI indicator to give false signals. It is prudent to supplement the RSI with another indicator. Wilder also believed that an indicator’s strength is revealed when its values ​​diverge from prevailing market prices.

If you don’t like the standard RSIYou can try Currency RSI Scalper.

Currency RSI Scalper For MetaTrader 4:

Currency RSI Scalper For MetaTrader 5:


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