RSI : Definition & How To Use RSI?
The Relative Strength Index (RSI) is a popular technical analysis indicator used to measure the strength and momentum of a market. Here's how to use the RSI indicator: Set up the RSI indicator: The RSI is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100 and is calculated by comparing the average gains and losses over a specified period of time, usually 14 days. A reading above 70 is considered overbought, while a reading below 30 is considered oversold. Look for divergences: Similar to the MACD indicator, traders can use divergences in the RSI to identify potential trend reversals. A bullish divergence occurs when the price makes a new low, but the RSI makes a higher low, indicating that the selling pressure is weakening. Conversely, a bearish divergence occurs when the price makes a new high, but the RSI makes a lower high, indicating that the buying pressure is weakening. Use the overbought and oversold levels: When
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