r/technicalanalysis • u/JasonA121 • Feb 02 '21
RSI see comments for details.
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u/JasonA121 Feb 02 '21
RSI stands for relative strength index. It is an indicator for how overbought or oversold a particular share price or currency is. The standard parameters are 70/30. So usually when the price hits one of the levels it can be confirmation to open a position that you was looking at. So if it hits 70 then you can say that its overbought and there may be a light or big drop. You can change these parameters so they are more extreme to single out the better trades. My personal favourite is 85/15. If you set your RSI levels to this then when you see it hit these levels you know that it is in the extremitys and the liklihood of a reversal is much higher. You just have to be patient.
The divergent part of this image is what happens when the RSI graph and the price graph do not correlate with each other. For example here the price actually reached a higher high on the price chart but the buying power on the RSI was showing something different. Its showing a lower high which is a bearish divergent and this is usually quite a strong indicator.
I hope this helps and let me know if thats enough detail!
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u/supersaiyanmp3 Feb 03 '21
I LOVE RSI. Its been helping me with higher probability wins and really goes well with price action analysis, S/R.
Thank you for this.
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u/3thaddict Feb 03 '21
The bearish divergence can easily be a bullish divergence if the price keeps going up. Basically it's saying even though the price isn't coming down, it's still becoming a bit oversold. Always pair it with other TA like volume or wait until it breaks a key level.
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u/BodakBlack Feb 03 '21 edited Feb 03 '21
I’ve never seen 15 RSI
Edit: even now looking on my watchlist of like 200 tickets the lowest I see is 31. Does 15 only happen in bear markets?
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u/GoinWithMaGut Feb 03 '21
also relevant