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How to Day Trade with the Relative Strength Index (RSI) (Australia Session)
Wednesday, February 7, 2018
Expert: Rob Clayton Hosted by: USGFX- Forex
- Technical Analysis
- Trading Systems
- Beginners
- Intermediate
In this webinar, I will be covering one of the most popular oscillators – Relative Strength Index (RSI).
Many traders look to the RSI traditionally for its overbought and oversold levels and also, divergence.
The RSI is a basic measure of how well an asset is performing against itself by comparing the strength of the up days versus the down days. This number is computed and has a range between 0 and 100. Usually, a reading above 70 is considered bullish, while a reading below 30 is an indication of bearishness. The signals given by the Relative Strength Indicator (RSI) are: Movements above 70, are interpreted as indicating overbought conditions, thereby giving the opportunity to sell. Conversely, movements under 30 signals oversold conditions, by which, giving the opportunity to buy.
Divergence is a powerful signal that can spot potential market reversals by comparing the indicator and market direction. When you see RSI divergence, this occurs when price splits from the indicator, and they begin heading in opposite directions. For example, you will see the price making a higher high, but then, on the corresponding time on the RSI indicator window, you will see the RSI indicator making a lower high. This behavior is called divergence.
Timeframe
Even though 14 is the defaulted setting that may not make it the best setting for your trading. Normally, short-term traders use a shorter period, such as a 7 or lower period RSI, to create more indicator oscillator. While longer-term traders may opt for a higher period, such as a 20 to 25 period RSI) for a smoother indicator line.
Rob Clayton
Rob is an Australian FX expert and former Westpac senior analyst with over 28 years’ experience in the markets. Join Rob’s live webinar and find out how you can make use of specific technical analysis tools to help you make better, smarter trading decisions!
Many traders look to the RSI traditionally for its overbought and oversold levels and also, divergence.
The RSI is a basic measure of how well an asset is performing against itself by comparing the strength of the up days versus the down days. This number is computed and has a range between 0 and 100. Usually, a reading above 70 is considered bullish, while a reading below 30 is an indication of bearishness. The signals given by the Relative Strength Indicator (RSI) are: Movements above 70, are interpreted as indicating overbought conditions, thereby giving the opportunity to sell. Conversely, movements under 30 signals oversold conditions, by which, giving the opportunity to buy.
Divergence is a powerful signal that can spot potential market reversals by comparing the indicator and market direction. When you see RSI divergence, this occurs when price splits from the indicator, and they begin heading in opposite directions. For example, you will see the price making a higher high, but then, on the corresponding time on the RSI indicator window, you will see the RSI indicator making a lower high. This behavior is called divergence.
Timeframe
Even though 14 is the defaulted setting that may not make it the best setting for your trading. Normally, short-term traders use a shorter period, such as a 7 or lower period RSI, to create more indicator oscillator. While longer-term traders may opt for a higher period, such as a 20 to 25 period RSI) for a smoother indicator line.
Rob Clayton
Rob is an Australian FX expert and former Westpac senior analyst with over 28 years’ experience in the markets. Join Rob’s live webinar and find out how you can make use of specific technical analysis tools to help you make better, smarter trading decisions!