📈 What is the RSI Indicator? And how does it benefit you in trading?
The RSI Indicator (Relative Strength Index) is a technical tool used to measure the strength of price movement over a specified period of time (usually 14 candles). Its values range between 0 and 100.
⸻
📊 How do we interpret the RSI reading?
• When the indicator value is above 70, it means that the asset may be in an overbought zone, which may be followed by a price correction or a decline.
• When the value is below 30, it indicates overselling, and a potential upward rebound may occur.
• Values between 30 and 70 indicate a normal or neutral area for the market.
⸻
🛠 How can it be used in trading?
• It can be used to identify potential reversal moments.
• If it is above 50, it often indicates an upward trend, and if it is below 50, it indicates a downward trend.
• It also helps in detecting divergences between price movement and the indicator, which may indicate an upcoming change in direction.
⸻
💡 Quick Tips:
✔ Do not rely on the RSI alone – it is better to combine it with tools like moving averages or MACD.
✔ Wait for confirmation of movement before making an entry decision.
✔ Monitor the indicator on multiple time frames for a more accurate view.
