RSI is a momentum indicator developed by Welles Wilder.
it compares magnitude of recent gain and losses over a specified period of time to measure speed and change of price movement of a security
primarily it is used for overbought or oversold conditions of given asset
RSI= 100-100/(1+RS)
where RS= Average gain of up period during specified period of time /Average loss of down period during specified period of time
default time period for comparing up period to down period is 14 trading day
traditionally it is set that RSI is considered overbought when it is above 70 and oversold when it below 30.
overbought is a position where securities price is so high that market start ripping profit by selling and market become selling dominant for that securities hence price start declining
oversold is a support to a securities that price would not fall beyond that. and it has to bounce back
at this position investor sense fair price for securities to enter into.
this are the primary signal that RSI provide
But market do not solely work on demand supply basis hence it can be possible that there would be divergence in this rule
as it can been seen that it is a comparison between high and low made by security in given period of time.
RSI also denote trend of securities and give data of support and resistance of the securities
if securities is plotting RSI chart which bounce back from 50 and reach to 80 and fluctuate in between this two position than it could been seen as securities is in bullish trend
RSI at 50 become support for that securities
Reverse is also true in bearish condition that securities is plotting RSI which resists at 60 and fall back to 30
So basically RSI gives trend of particular securities
Yes divergence can happen to this rule what securities is rising highers high but RSI is not confirming it
here chances are that securities takes up bearish movement.
it has to be confirm with other indicators.
So basically RSI is a momentum indicator giving insight of particular stock trend in the market
but for getting accuracy we have to confirm indication with other indicator
it compares magnitude of recent gain and losses over a specified period of time to measure speed and change of price movement of a security
primarily it is used for overbought or oversold conditions of given asset
RSI= 100-100/(1+RS)
where RS= Average gain of up period during specified period of time /Average loss of down period during specified period of time
default time period for comparing up period to down period is 14 trading day
traditionally it is set that RSI is considered overbought when it is above 70 and oversold when it below 30.
overbought is a position where securities price is so high that market start ripping profit by selling and market become selling dominant for that securities hence price start declining
oversold is a support to a securities that price would not fall beyond that. and it has to bounce back
at this position investor sense fair price for securities to enter into.
this are the primary signal that RSI provide
But market do not solely work on demand supply basis hence it can be possible that there would be divergence in this rule
as it can been seen that it is a comparison between high and low made by security in given period of time.
RSI also denote trend of securities and give data of support and resistance of the securities
if securities is plotting RSI chart which bounce back from 50 and reach to 80 and fluctuate in between this two position than it could been seen as securities is in bullish trend
RSI at 50 become support for that securities
Reverse is also true in bearish condition that securities is plotting RSI which resists at 60 and fall back to 30
So basically RSI gives trend of particular securities
Yes divergence can happen to this rule what securities is rising highers high but RSI is not confirming it
here chances are that securities takes up bearish movement.
it has to be confirm with other indicators.
So basically RSI is a momentum indicator giving insight of particular stock trend in the market
but for getting accuracy we have to confirm indication with other indicator