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RSI also known as Relative strength Index. It is one of the technical Indicators. It has a line for 70 and 30 Score. When the price moves above 70 the share is in the buying zone
It is devoloped by J Welles Wilder.The Relative Strength Index is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between 0 and 100. Traditionally and according to Wilder RSI is considered overbrought when above 70 and oversold when below 30
Indicators give us an idea of price movement and to confirm the trend.
It is used to confirm the trend we have identified using dow theory,price patterns, candle stick charts.RSI (leading indicator/Non Tredning indicator)
I open the price chart and apply the RSI (for short term use 21days).
I can see the RSI curve in the scale of 0-100.RSI > 70 –>indicates strong supply zone (lot of buying is happening).
But if it crosses below 70 mark–>overbought (no more buying)–>i should sell.
The trend is expected to be -ve.RSI < 30 –>indicates weak buyers zone (lot of selling is happening).
But if it crosses above 30 mark–>oversold (no more seeling)–>i should buy.
The trend is expected to be +ve.Relative strength index(RSI):
It works well when price moves in sideways, it is non-trending indicator.
It has marks from 30-70.
If RSI>70, it indicates strength, lot of people buying the stock. (over bought).
If RSI<30, it indicates weakness, lot of people selling the stock. (over sold).
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