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Relative strength index – there are two ranges in RSI 30 and 70
It is easy to identify in the non trending zone
If the stock goes above 30 zone then it is a buying zone.
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 the relative strength index is a non trending indicator. When the stock becomes oversold it crosses below 30 mark and moves back again above 30. Hence a stock can be bought above 30 mark.
Relative Strength Index – it works well for sideways market its a non trending indicator
Market price movement would be fit in to 70, 30 horizontal scale
If Price move above 30, means all sellers have sold their stocks and there is a buying pressueThe relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. An asset is usually considered overbought when the RSI is above 70% and oversold when it is below 30%.
Generally, when the RSI surpasses the horizontal 30 reference level, it is a bullish sign, and when it slides below the horizontal 70 reference level, it is a bearish sign. Put another way, one can interpret that RSI values of 70 or above indicate a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective price pullback. An RSI reading of 30 or below indicates an oversold or undervalued condition.
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