Advanced RSI: RSI Bollinger Bands

Oct 3, 2022

Advanced RSI Overview[\b]

• The conventional RSI momentum indicator measures the magnitude of price changes over a user-specified period to determine overbought and oversold conditions in the price of an asset.
  
• MetaWorld Advanced RSI adds several sophisticated features to enhance the analysis of RSI to detect early signs of trend reversals and continuations.
  
• Advanced capabilities include customizable fast and slow RSI moving averages, advanced overbought and oversold signals, RSI Bollinger Bands, and regular and hidden divergences.
  
• These features provide traders with opportunities to identify confluence using other MetaWorld Crypto indicator suite signals and increase the probability of entering winning trades.
  

RSI Bollinger Bands[\b]

• Like Bollinger Bands for price action, RSI Bollinger Bands can be used as moving overbought and oversold thresholds, which adjust with the RSI oscillator based on its volatility.
  
• When RSI breaks out above the upper RSI Bollinger Band, the asset is overbought on a relative basis, given its price history.
  
• When RSI breaks out below the lower RSI Bollinger Band, the asset is oversold on a relative basis.
  
• Evaluating RSI on a relative basis is more reliable than evaluating RSI on an absolute basis with fixed 70/30 thresholds for overbought/oversold, which traditional RSI analysis relies on.
  
• This is because rigid 70/30 thresholds are arbitrary rules-of-thumb that may (or may not) be relevant to current market conditions.
  
• When RSI is riding the upper or lower Bollinger Bands and breaks towards the middle, this reversion to the mean (i.e., basis line) can signal that the trend may be reversing.
  
• Toggle to turn on the basis (i.e., mean) line of the RSI Bollinger Bands.
  
• The basis line can also be used as a support line when RSI values are above it or as a resistance line when RSI values are below it.
  
• Always practice risk management: Use proper position sizing and a stop-loss on every trade.
  
  * This tutorial is intended for educational purposes only.