Relative strength index indicator is based on the number of positive and negative candlestick bars and this works well with non trending zone.
When the RSI is applied on the non trending zone, it provides the index with the mark of 70 and 30 scale. When the index moves below 30, it indicates the aggressive selling pressure and when it crosses 30 again and moves above, it indicates the bullish trend and the long position can be created to buy.
Relative Strength Index or RSI is a momentum indicator that compares the average price change of the advancing periods with the average change of the declining periods.
The RSI can also be used to identify the overbought/oversold levels in a counter, the RSI value above 70 as ‘overbought zone’ and below 30 as ‘oversold zone’.
If a stock is trading stable and moves below 30 level on RSI indicator and then moves above 30 level with significant volume we can create a long position and similarly we can create a short position when the stock that was traded above 70 level breaks down the 70 level with high volume.
RSI ( Relative strength index ) This is a momentum indicator having two horizontal lines indicating 70 at top and 30 at bottom
This indicator works well with in this zone 30 to 70
Price movement above 70 shows OVER BOUGHT area and price movement BELOW 30 shows OVER SOLD area
BUYING ZONE When price crosses ABOVE exactly at 30 it the right point to buy