Application of the RSI indicator

Technical indicator 1. According to the formula, 0 ≤ RSI ≤ 100. RSI = 50 is the dividing point between a strong market and a weak market. Usually, RSI80 is set as an overbought area, and the chance of market backsliding increases; RSI < 20 is an oversold area, and the chance of market rebound increases.

2. Generally speaking, the RSI U-turn down is a sell signal, and the RSI U-turn up is a buy signal. But the application should be based on the judgment of the overall situation.

3. The M-shaped trend of the RSI is a common peak pattern in the overbought area; the W-shaped trend is a common bottom pattern in the oversold area. At this time, it is often seen that the RSI trend deviates from the price trend. Therefore, the deviation phenomenon is also a buying and selling signal.

4. The RSI goes from bottom to top, with one trough higher than the other forming a rising support line; the RSI goes from top to bottom, with one peak lower than the other forming a falling pressure line. A fall below the support line is a sell signal, and a rise through the pressure line is a buy signal.

5. Crossing the 50 demarcation line on the RSI is a buy signal, and breaking the 50 demarcation line is a sell signal.

6. The N value of the RSI on N days is usually taken from 5 to 14 days. The larger the N value, the stronger the sense of trend, but there is a tendency to lag in response, which is called the slow line; the smaller the N value, the more sensitive it is to changes, but it is easy to produce a feeling of erratic, which is called the fast line. Therefore, the slow line can be compared with the fast line. If the two lines go up together, the upward trend is stronger; if the two lines go down together, the downward trend is stronger; if the fast line crosses the slow line, it is a buy signal; if the fast line crosses the slow line, it is a sell signal.

7. Due to the design of the RSI, after the RSI enters the overbought zone or oversold zone, even if the market situation fluctuates greatly, the rate of change of the RSI gradually slows down and the volatility becomes less and less, that is, the so-called passivation problem occurs. Especially when it continues to rise or fall sharply, it is easy to experience the regret of "rushing" in trading. The solution to this problem is to adjust the definition index of the overbought zone or oversold zone, such as above 90 and below 10; the second is to increase the value of N

RSI (n) = n-day average of closing price increases & pide (n-day average of closing price increases + n-day average of closing price decreases) × 100

The use of RSI indicators should be combined with other technical indicators for analysis

1. The relative strength index value fluctuates between 0 and 100. Generally, the relative strength index varies from 30 to 70, with more opportunities between 40 and 60, and few opportunities above 80 or below 20.

2. When the stock market goes through a period of decline, the relative strength index also continues to fall from a high to below 30. If it breaks through 60 from a low and is confirmed, it indicates that the bulls have regained the upper hand.

3. When the stock market goes through a period of upswing, the relative strength index also rises from a low to above 80. If it falls below 40 from a high, it indicates that the bears have regained the upper hand.

4. When the change of the relative strength index in the high-price area and the low-price area is inconsistent with the change of the stock price, it indicates that the general trend is about to reverse.Anzo Forex

5. The highest point in the relative strength index graph has a strong backpressure effect; the lowest point in the relative strength index has a strong support effect.

6. If there is a price correction in a bull market, the first line of defense for bulls is RSI = 50, the second line of defense is RSI = 40, and the third line of defense is RSI = 30.

7. If there is a price rebound in the bear market, the first line of defense for bears is RSI = 50, the second line of defense is RSI = 60, and the third line of defense is RSI = 70.

8. The low concentration area formed by the RSI value in the long market due to the decline of the stock price is also the first line of defense for the bulls. The high point of the RSI in the rebound and consolidation stage of the stock price in the short market is also a line of defense for the bears.

9. During the consolidation phase, the value is between 40 and 60. If the market strengthens, the RSI value can often be above 80. Conversely, when the stock market is in a slump, the RSI value is below 20.