Practical thread on RSI focused on day trading:
1. Momentum is the one of the most important and crucial aspects of TA in trading without which opportunity cost is lost.
3. RSI is measured between values of 0 and 100 with certain values being defined as overbought and oversold.
4. These values are not constant but depends on:
b. Overall strength of the stock's/market's trend.
c. Current Market cycle.
5. The size of the TF and value of RSI are inversely proportional.
6. Ideal trade conditions are when RSI on 5 mins>15 mins>1hr in case of bullish trend.
7. RSI>50 is considered to have bullish momentum and below 40 to have bearish momentum. Some consider ideal bullish momentum> 60
8. RSI between 40-50 is considered as a no trend zone.
9. Overbought and Oversold conditions:
B. What does OB and OS conditions tell you?
OS: Do not enter fresh shorts. If entered earlier, trail SL tighter and get ready to exit if price starts reversing.
D. Just OS does't mean - Exit your shorts or enter fresh longs.
E. In typical bull and bear market conditions, RSI can remain in OB and OS for long periods with price not reversing.
11. Use price as your base but not RSI and you will be rewarded most of the times.
13. The more you experience trading, the more you will be able to take better decisions.
If you liked the thread, please like and RT. Feed backs are welcome. Do note, this is just the tip of the deep subject of RSI. It has multi fold uses.