There are RSI-Relative Strength Indexes among the main indicators used
in trading Forex market. It is followed frequently by traders due to ease of
use and signal success. We will have desribe to you, what is RSI, how to used
Rsi and how to interpreted RSI on the platform.
The RSI (Relative Strength Index) is a display
published by J. Welles Wilder in 1978. Basically, prices identify overbought
and oversold territories and allow us to predict where they might go.
This indicator, which is often used when performing
technical analysis, is indicated by a line with a value between 0 and 100. It
compares the prices of percentage, based on the figures between these two
values by calculating between the overselling days and overbought.
The use and interpretation of these values, which are
automatically calculated in Forex Meta programs, is quite simple in terms of
investors. We can easily interpret and understand the underlying rationale to
gain profits.
Features of the RSI indicator
RSI; It is added on the platform as arranged according to the 14 day
period. However, you can change these period values according to your
investment strategy.
The index shows two numerical values of 30 and 70. The
indicator is interpreted according to the prices that occur below or above
these two values.
- Below the 70 level, indicating that prices may fall, giving a SELL signal
- The upward movement of the level 30 signals that the prices may rise, signaling BUY.
Interpretation of the RSI indicator
We have said that the RsI indicator is successful
in determining overbought and sell territory. Let's see how we interpret it
now.
The approach to the 70 levels of the demonstrator shows
that there is a lot of purchases and that downward movement is possible from
these points, progressing towards the level 30 of the show, there is a lot of
sales and the upward movement is likely to continue.
In order not to make mistakes in interpreting, it is
necessary to read it correctly, observing the graph well.
If prices go above 70 line, if you enter the sales
transaction by thinking about approaching the excessive buying area, you may
see damage if the increase continues.
For this reason, waiting for a period of time
over the 70 line and waiting breaking the 70 lines of prices again to watch the
sale process will be more correct behavior. The same applies is to decisions of
buy below 30 lines.
This indicator, which is easy to use, is
often preferred among investors because it provides easy-to-understand and
accurate estimates.
In addition to the lines 70 and 30, you
can also specify the level 50, which is the midpoint. To do this, right-click
on the indicator with the mouse, select RSI properties, then scroll down to the
Levels tab and type 50 in the Add column.
You can get a new transaction decision by seeing the
average level of the price on this page and you can have a better idea of the
exit point from the current transaction.
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