What is it about and how is it used?The Relative Strength Index strategy is useless, with only 30 trades in 20 years, while the Chande Momentum Oscillator strategy could be used by implementing something. This indicator is especially popular among technical analysis traders. You might be thinking that any term that includes the words ‘relative’ and ‘index’ can’t be all that fascinating, but that’s just because you haven’t gotten to know the abilities of the RSI or grasped its potential for online traders.
The iFOREX platform is equipped with an RSI indicator tool, as well as many other indicators, and you can see the chart at the click of a button.The RSI assesses momentum by comparing between higher closes and lower closes. They’re commonly used to identify short-term overbought or oversold instruments.Before we begin, let us reassure you: You will not need to actually calculate RSI, unless you really want to. Oscillators move over time within a band (either between predefined levels or above and below a center line).
A falling centerline crossover is seen as a bearish signal – as long as it’s not falling below the 30 line (which - in theory - indicates oversold).Feel like we’re going too fast? Take a pause and revise technical analysis for beginners. A rising centerline crossover is seen as a bullish signal – but only until the RSI nears the 70 line (which - if you remember the theory - indicates overbought). There are two types of these crossovers:This crossover takes place when the RSI value moves above the 50 line and nearing the 70 line on the scale.You can probably guess when this crossover takes place… that’s right - when the RSI value moves below the 50 line, nearing the 30 line.Why do traders care about centerline crossovers? Because they can be used as market signals.
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