![]() Traders should keep in mind that during periods of very strong trends, a security’s price may continue to rise for a long time after an oscillator such as the RSI signals “overbought” conditions in the market. If, for example, a security’s RSI consistently hits above the 70 mark or below the 30 mark without correctly forecasting a change in price trend, a trader might adjust the upper end to 80 and/or the lower end to 20 to get more reliable trading signals. The levels can be adjusted, however, to better fit the price movement of a specific security a trader is watching. Traditionally, the Relative Strength Index is considered to signal overbought conditions when above 70 and oversold conditions when under 30. However, the index can be broken down into a (fairly) simple formula: RSI = 100 – The Relative Strength Index – What to Watch Out For It is presented in his 1978 book, New Concepts in Technical Trading Systems. To fully understand how the calculation is accomplished, traders and analysts should read Wilder’s own explanation. Calculation of the RSI, to be done thoroughly, requires a great deal of highly technical and complex explanations. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
May 2023
Categories |