The Relative Strength Index (RSI) is a classic technical indicator that is applied to identify the overbought and oversold states of the market.
While the RSI looks simple to use, there is one important element in it that many traders forget about: it's a lagging indicator.
This means it reacts to past price movements rather than predicting future...
Explanation:
Detection of Peaks and Valleys: Initially, the RSI (Relative Strength Index) is calculated based on a selected price source. Then, any change in RSI that exceeds the specified percentage threshold is considered a peak or a valley point. These points are visually represented on the chart with green and red triangles.
Identification of Divergences:...
Price overextension remains a widely misunderstood concept in trading, causing both novice and seasoned traders to make errors in their decision-making. This misinterpretation often leads to placing trades in the wrong direction or, equally detrimental, overlooking profitable opportunities.
In essence, price overextension signifies that the market has undergone a...
Trading Strategies with the Relative Strength Index
The Relative Strength Index (RSI) is a cornerstone in the world of technical analysis, assisting traders in capitalising on momentum-based opportunities. This article delves into three sophisticated RSI strategies, shedding light on how to deploy the indicator in different trading scenarios.
RSI in Trading...
