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How To Trade With RSI Indicators?

RSI Indicators

The Relative Strength Index (RSI) is considered to be one of the main momentum indicators or oscillators for forex chart analysis.

What is RSI?

The success of RSI Indicators depends on a price analysis of the overbought and oversold conditions in the forex market. So to benefit from the forex stock market by applying RSI, a user needs to have a complete idea about overbought and oversold conditions.

How To Trade With RSI Indicators?

RSI Indicators Formula:

  • RSI = 100 – 100 / Relative Strength (RS).
  • Where RS = average profit / average loss.

The difference between RS and RSI may come to the mind of a trader. RS is a value that expresses two different and different values ​​proportionally. And RSI indicates whether the Forex market price has changed due to overbought or oversold conditions.

How does RSI work in forex market?

Oscillators are always measured on a scale of 0 to 100. According to the theory, in the case of RSI, 60 points are considered overbought and 30 points as oversold. However, the trader can change the parameters of RSI in the market as per his wish. This means that the trader can count 60 or 65 points as overbought and 20 or 35 points as an oversold condition if he wants. The study found that in the case of the market in foreign exchange, 65 points often indicate overbought and 35 points oversold.

RSI Indicators Buy Sell Signal Strategy:

When the RSI moves to 30 levels or is oversold for a stock, traders start looking for investment opportunities in the market. When the RSI indicators cross the 30 levels and go down, it is better to prepare yourself mentally to buy the stock. If the RSI indicators cross the 30 levels from the bottom to the top or move from the oversold state to the overbought, it is considered a buy signal.

Similarly, if the RSI moves to 60 points, it means overbought, and if the RSI crosses the 70 levels from the top to the bottom, it is considered a cell signal.

RSI Indicators Example:

The forex chart below shows the RSI crossing the 35 levels in early December, which is a clear buy signal. In this case, the price has started at 13.9 and gradually increased. After the RSI reached a dangerous place, the light bounced back and down and as a result the price also dropped slightly. Since then, on December 21 and January 26, the RSI Indicators have crossed the 65 levels and gone down, and as a result, there has been a downward trend in prices. So that time was the right time to sell.

How To Trade With RSI Indicators?

In March, the RSI Indicators bounced back from the 35 levels. At the same time, changes in the price movement have also been noticed. Finally, the RSI crossed the 75 levels in May and the price went down-trend at about the same time.

Forex (Foreign Exchange money)-
There are various strategies in place regarding the technical analysis. In addition to advanced strategy, patterns, candles, chart patterns,s, etc. you can be seen to get an idea about the trend of the forex market.
Stay with us I have written all step by step.
Happy trading.

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