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The RSI (Relative Strengh Index)

The RSI (Relative Strengh Index) is a oscilator which measures the balance of power between buyers and movementsvendeurs.

The RSI fluctuates between 0% (bear market) and 100% (bull market). The area between 0% and 30% (70% and 100%) is considered an oversold zone (overbought).

The commonly used period is 14 days. For a period of 9 days, the limites area will be at 75% and 25%. For a period of 3 days, the limites area will be at 90% and 10%.

Purchase signal

When the trend of the RSI is changing and the trend is now on the rise in oversold zone (before crossing the line up of 30%).

Sale signal

When the trend of the RSI is changing and the trend is now on the decline in overbought zone (before crossing the line down of 70%).

Note

When the trend of the RSI is in opposition with the trend of the price, the current trend of the price will decrease. This is called divergence and should be considered as a warning before a change in trend.

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