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Rsi_overbought

What Is the RSI Indicator & RSI DivergenceRSI - Relative Strength Index Indicator: The 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. It is important to note that the RSI does not indicate whether a stock is a buy or a sell; rather, it provides insight into the current trend of the stock. The RSI is a versatile indicator that can be used by traders of all levels and can be adapted for any style of trading. For example, a trader may use the RSI to identify support or resistance levels, or to spot divergences that can be used to predict future price movements. The RSI can also be used to locate potential trading opportunities by looking for overbought or oversold conditions. Furthermore, the RSI can be used in combination with other indicators, such as moving averages, to gain a better understanding of the market’s overall trend. Formula of RSI: The RSI is calculated using a formula that compares the magnitude of recent gains against recent losses over a specified period. The formula for the RSI is: RSI = 100 - (100 / (1 + (Average of Upward Price Movements / Average of Downward Price Movements))) What is periods in RSI: Periods in RSI (Relative Strength Index) are the number of time periods used to calculate the RSI. The most commonly used period for RSI is 14, but other periods such as 7, 9, and 25 are also used. This number represents the number of time periods that are used to calculate the RSI, so a period of 14 would mean the RSI is being calculated using the last 14 time periods. RSI divergence: RSI divergences are a type of technical analysis used to identify potential trend reversals in the markets. They are based on the Relative Strength Index (RSI) and are used to spot potential trend reversals before they occur. A divergence occurs when the price of an asset makes a higher high, but the RSI makes a lower high. This suggests that the current rally is losing momentum and may reverse course. Similarly, a lower low in the price and a higher low in the RSI may signal an impending rally. Divergences are best used in conjunction with other technical indicators and analysis to confirm price action. It is also important to keep in mind that divergences do not always lead to reversals and may simply signal a period of consolidation before the price continues its current trend. Divergence Cheat Sheet / Types of Divergence:
Education
by AfnanTAjuddin
1
#1 RSI(Relative Strength Index)100%Work# WE WILL MAKE ONLY PROFIT #The relative strength index (RSI) is a popular momentum oscillator developed in 1978. The RSI provides technical traders with signals about bullish and bearish price momentum, and it is often plotted beneath the graph of an asset's price. #What Does the RSI Tell You? The primary trend of the stock or asset is an important tool in making sure the indicator’s readings are properly understood. For example, well-known market technician Constance Brown, CMT, has promoted the idea that an oversold reading on the RSI in an uptrend is likely much higher than 30% and that an overbought reading on the RSI during a downtrend is much lower than the 70% level.1 As you can see in the following chart, during a downtrend, the RSI would peak near the 50% level rather than 70%, which could be used by investors to more reliably signal bearish conditions. Many investors will apply a horizontal trendline between 30% and 70% levels when a strong trend is in place to better identify extremes. Modifying overbought or oversold levels when the price of a stock or asset is in a long-term horizontal channel is usually unnecessary. A related concept to using overbought or oversold levels appropriate to the trend is to focus on trade signals and techniques that conform to the trend. In other words, using bullish signals when the price is in a bullish trend and bearish signals when a stock is in a bearish trend will help to avoid the many false alarms that the RSI can generate. #Example of RSI Swing Rejections Another trading technique examines the RSI’s behavior when it is reemerging from overbought or oversold territory. This signal is called a bullish “swing rejection” and has four parts: 1. The RSI falls into oversold territory. 2. The RSI crosses back above 30%. 3. The RSI forms another dip without crossing back into oversold territory. 4. The RSI then breaks its most recent high. As you can see in the following chart, the RSI indicator was oversold, broke up through 30% and formed the rejection low that triggered the signal when it bounced higher. Using the RSI in this way is very similar to drawing trend lines on a price chart. IF YOU NEED ANY HELP JUST COMMENT OR MESSAGE M😊😊
NSE:BANKNIFTYEducation
by UnknownUnicorn22712522
37
Overbought and Oversold RSI - The Myth !Generally, When RSI shows values higher than 70 or below 30, this is to considered as stock or index is overbought or oversold. But that's not always the case. As we just learned In The Introduction : Relative Strength Index (RSI) that a high RSI means that there were more bullish candles then bearish candles. As stock or index can't go up or down in straight line there will be some pullbacks. IF RSI gets Overbought or Oversold and we get a minor pullback in prices then it must not be considered as a reversal in direction. It Can be dangerous to believe that just because the RSI shows overbought or oversold condition then its time to sell or buy. Once we understand What RSI really does, Overbought and oversold conditions must not be a signal of reversal for us which indicate that price will change its direction. It's a myth and we may miss out on a lot of bigger moves on those momentum stocks. Following example is a perfect case of Overbought And Oversold RSI And still price continued its Main Direction on Weekly, Daily and on 15 Minutes Charts as well. Example 1) When Price was at 500 levels RSI did show overbought Conditions and From that, it remained in overbought zone for a long time and price rallied almost 5 times to 2500 levels. Example 2) RSI was Oversold When Price was around 880 and Since then it made a low of 670 Almost 25% fall remaining in Oversold Conditions. ( Daily Chart ) Example 3) Nifty on 15 Minutes Chart Since when RSI Went below 30, Oversold condition and Nifty gave up another 300 points from there. Example 4) Banknifty Rallied almost 700 Points Since RSI showed Overbought Condition. ( 15 Minutes ) The RSI done not provide signals to buy when it is overbought or oversold. It simply means that the prices are very strong or very weak. I know that most of experience traders are here who already knows this things. Thank you, EEz
NSE:VENKEYSEducation
by Equity-Earningz
3