RSI = Relative Strength Index
Is fluctuates between 0 and 100
· A momentum Oscillator
· Increasing RSI when: Average gains are greater than average losses = Bullish
· Decreasing RSI when: Average gains are less than average losses = Bearish
How to use:
1. Trend recognition: trading in the direction of the trend
1.1 Above 50: Uptrend
1.2 Below 50: Downtrend
2 Overbought and oversold entry signals.
2.1 In an uptrend look for oversold areas and open a long trade after the pullback above 30.
2.2 In a downtrend look for overbought areas and open a short trade after the pullback below 70.