Barry Norman’s Explains Relative Strength Index – RSI – for Forex and Cryptocurrency

Barry Norman’s Explains Relative Strength Index – RSI – for Forex and Cryptocurrency

The most basic RSI application is to use it to identify areas that are potentially overbought or oversold. Movements above 70 are interpreted as indicating overbought conditions; conversely, movements under 30 reflect oversold conditions. The level of 50 represents neutral market momentum and corresponds with the center line in other oscillators such as MACD.
Wilder outlines another important indicator of a potential price reversal called failure swings. A bullish failure swing forms when RSI moves below 30, rises back above 30 and pulls back again, but holds above the 30 level. The failure swing is complete when the RSI breaks its recent high; this breakout is interpreted as a bullish signal.

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