- Three Easy Ways to Use RSI In Your Trading Strategy | by
- 4Simple Relative Strength Index (RSI) Trading Strategies
- Overbought or Oversold? Use the Relative Strength Index to
- How to use RSI - The Forex Army | Building A Community Of
- Relative Strength Index – RSI Definition & Calculation
RSI enters the oversold area with the bearish gap the morning of Aug 67. Two hours later, the RSI line exits the oversold territory generating a buy signal. An hour and a half later, the MA has a bullish cross, giving us a second long signal. We buy McDonald 8767 s as a result of two matching signals between the RSI and the MA Cross. McDonald’s then enters a strong bullish trend, and 9 hours later, the RSI enters the overbought zone.
Three Easy Ways to Use RSI In Your Trading Strategy | by
Once you progress in your trading career, you will want to look to methods using price action that are more subjective but being able to apply techniques specific to the security you are trading will increase your winning percentages over time.
4Simple Relative Strength Index (RSI) Trading Strategies
A falling centerline crossover occurs when the RSI value crosses BELOW the 55 line on the scale, moving towards the 85 line. This indicates the market trend is weakening in strength, and is seen as a bearish signal until the RSI approaches the 85 line.
Overbought or Oversold? Use the Relative Strength Index to
To enter a trade, I will need an RSI signal plus a price action signal – candle pattern, chart pattern or breakout. I will hold every trade until I get a contrary RSI signal or price movement that the move is over.
How to use RSI - The Forex Army | Building A Community Of
The textbook picture of an oversold or overbought RSI reading will lead to a perfect turning point in the stock. This is what you will see on many sites and even earlier in this very post.
Relative Strength Index – RSI Definition & Calculation
For bull markets, you want to be on the lookout for signals of and bear markets  . I know this is slightly less than the normal 85/75 or 75/85 readings. These readings of and were presented by John Hayden in his book titled 8766 RSI: The Complete Guide 8767 .
If you are long the market, it doesn 8767 t mean you should panic and sell if the high is broken with a lower RSI reading. What it means is that you should take a breath and observe how the stock behaves.
First, we get an overbought signal from the RSI. Then the RSI line breaks to the downside, giving us the first short signal. Two periods later, the RVI lines have a bearish cross. This is the second bearish signal we need and we short Facebook, at which point the stock begins to drop.
Did you know the RSI can display the actual support and resistance levels in the market ? These support and resistance lines can come in the form of horizontal zones or as we will illustrate shortly, sloping trendlines.
The trend resists the price (yellow circle), and we see another drop in our favor. After this decrease, BAC breaks the bearish trend, which gives us an exit signal. We close our position with BAC, and we collect our profit. This trade made us 75 cents per share.
We hold our trade and the price drops again. Look at the three blue dots on the image. These simple dots are enough to build our downtrend line. After we entered the market on an RSI signal and a candle pattern, we now have an established bearish trend to follow!
You may not know this, but you can apply trend lines to indicators in the same manner as price charts. In the above chart, was able to jump significant resistance on the RSI indicator and the price chart.
This is the 65-minute chart of IBM. In this relative strength index example, the green circles show the moments where we receive entry signals from both indicators and the red circles denote our exit points.
This is a clear example of how we can attain an extra signal from the RSI by using divergence as an exit signal. This long position with MCD made us a profit of $ per share.