RSI
Current parameter: RSI(6,12,24)
Indicator Features
• RSI can quickly lead to reflect price changes
• RSI shows a normal distribution, which can be used to judge whether the market is overbought or oversold
• RSI will have a peak or bottom before the stock price changes, which can reflect the ups and downs of the stock price in advance, and can be regarded as a leading indicator of the trend of the market index
• RSI is a stock price momentum strength indicator. The high and low points formed by its trajectory online can be used as tangent lines and tangent points to find out the pressure line and support line
What is RSI
Relative Strength Index (RSI for short), also known as relative strength index and relative strength index; RSI was proposed by J. Welles Wilder in June 1978 to calculate the market buying and selling power comparison through the change of stock price in a specific period. It is a technical indicator to judge the internal nature of the stock price and speculate on the future direction of price changes.
Algorithm
RSI = n-day average increase ÷ (n-day average increase + n-day average decline) × 100
In,
The average increase in n days = the sum of the total increase in the rising days within n days ÷ n
The average decline in n days = the sum of the total decline in n days ÷ n
The commonly used n is 14 days, but usually each software can set the number of days parameter by itself.
RSI (Relative Strength Index) is calculated by using the average stock price increase (only when it is rising) and the average decline (only when it is falling) for a certain period of time. It can be seen that the price of the stock price is strong or weak in a certain period of time. Simply put It is to use the power of two-way pulling in buying and selling to calculate the equilibrium point of both parties and judge the future trend of stock prices within a period of time.
For example calculation:
During the last 14 days,
There are 10 days of increase, the cumulative increase is 14%, and the average increase is 14% ÷ 14 = 1%
There are 4 days of decline, the cumulative decline is -7%, and the average decline is 7% ÷ 14 = 0.5%
RSI = 1% / (1%+0.5%)× 100 = 66.7
Usage of RSI
Overbought
In RSI analysis, in general, when the RSI is above 70, it is considered overbought and considered a bearish signal. It is also considered overbought.
Oversold
In RSI analysis, in general, when the RSI is below 30, it is considered oversold and is usually seen as a bullish signal.
RSI trading opportunity
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