Use The Magic Of RSI To Beat Market Trends
RSI (Relative Strength Index) is a Momentum Oscillator. It indicates whether a market is losing or gaining its momentum in the current direction. If used correctly in association with other tools, we can use RSI To Beat Market Trends.
Usually RSI is usded in 3 ways. But to produce best results, a trading strategy must make use of other tools and use RSI as one of the additional indicators to give confirmation. This is because of the fact that RSI can stay at a level for a long period of time while price is still moving.
- Overbought/Oversold Conditions
- Divergence (Loss/Gain of Momentum)
RSI Divergences Chart Price Action RSI Expected Type Making Lower/Equal Lows Making Higher Lows (Gaining Upward Momentum)
Bullish Regular Making Higher/Equal Highs Making Lower Highs (Losing Upward Momentum)
Bearish Regular Making Higher/Equal Lows Making Lower Lows (Losing Downward Momentum)
Bullish Hidden Making Lower/Equal Highs Making Higher Highs (Gaining Downward Momentum)
Bearish Hidden - Center Line Crossover
- Bullish above 50:
- Bearish below 50
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