Thread by @dgcryptotv

It's #VALUE_SERIES 🚀

@izra_elf a student of #DG_ACADEMY will ride us into the world of indicators as he will explain "RSI: RELATIVE STRENGTH INDICATOR"

#Value awaits as we ride 🚀🚀
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#ValueSeries #trading #Crypto #dgcryptotv #indicators #RSI

The #Relative_Strength_Index is a convenient indicator for one to use for trades. This #indicator mainly spells out the #overbought and #oversold situation of the market. So, What exacty is the Relative Strength Indicator?

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Commonly called the #RSI, this is a technical analysis tool that can help show the momentum of a market. The #RSI when added to your chart, acts like an oscillator which rotates between 0 and 100.

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There are 2 main levels used by traders on the RSI which are the 30 and 70 numbers, indicating that when price moves above the 70 level its bias will be that the market is #overbought...

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On the other hand, when price moves below the 30 level its bias will be that the #market has been #oversold. Using these levels, one can start potential market reversals predictions, when the #market is either #overbought or #oversold.

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How to use the #RSI

The #RSI rise as the amount of positive closes increases. On the other hand it will fall as the amount of losses increases. All this is clearly done by the #RSI oscillator.

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The #RSI was created in 1978 and is now one of the most popular indicators for price action and technical analysis traders. It can be used to both find and manage trades by combining with other indicators.

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When you add the RSI indicator to your chart, you are been given an indicator that moves higher and lower. As stated earlier the two main levels that we observe are the 30 and 70 levels.

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For bullish reversals, we are looking to see when the price starts moving below the 30 level which indicates that the market is oversold, and a potential reversal back higher could be on the cards.

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For bearish reversals, we are looking to see when the RSI starts moving above the 7 level which will indicate that the market is overbought and is looking to make a bearish reversal back lower.

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N/B: In trending markets the #RSI doesn’t indicate #overbought and #oversold levels, it just moves in bands or ranges. In the chart below, you can see the price has been in a trend lower, but the #RSI stays between the 30 and 70 bands.

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#RSI Buy and Sell Signals

The #RSI can also be used to find buy and sell signals in the market. Meanwhile the best way to achieve this is by combining it with other technical analysis tools to confirm a potential trade.

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One of the simplest ways of doing this is using the #RSI at key levels in the market such as the #support and #resistance levels or areas of importance.

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Lets take an example;

In the Example below, price is moving into a key resistance level. This is a major level and a level we could be watching for potential short reversal trades. When we look at the RSI, we see that price is moving above the 70 level...

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...indicating #overbought conditions and a potential reversal lower. Using these two pieces of information we could make a short trade and price as price moves back lower and away from the resistance level.

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Hope you got #value 😍

Drop all questions, comments and contributions on the comment section. Do not forget to like and retweet aswell 😊.

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