How To Use RSI (RELATIVE STRENGTH INDEX) Indicator
The Relative Strength Index (RSI) was developed by J. Welles Wilder, the author of another standard indicator for МТ4 and МТ5, the ATR indicator.
Wilder first published the description of the RSI indicator in Commodities magazine in 1978. A few years later, his book New Concepts in Technical Trading Systems was published, where he described the technical tool
Horizontal dotted lines are signal lines, whose parameters are specified in the settings. The values of 30 and 70 are by default; the levels scale is on the right of the chart.
The overbought zone is between levels 70 and 100.
The oversold zone is between the levels of 30 and 0.
These zones are strong as the trend and the oscillator are the most likely to reverse.
For More info - https://gurujitrading.com/how-to-use-rsi-and-rsi-divergence/
If the trend is clear, the levels of the borders of the range can be moved to 20 and 80. Levels 30 and 70 are used if the trend is weak, or the market is trading flat. The longer is the distance between the signal levels, the less frequent are signals. One the other hand, the signals are more accurate in this case.
You can employ the indicator in any market. It is equally efficient in the Forex trading charts, in the securities or stock markets.
https://www.investopedia.com/terms/r/rsi.asp
RSI Indicator Calculation & Formula
What does the RSI indicate? By the RSI meaning, the indicator compares the size of candlesticks (i.e. the trend strength. The longer is the candlestick, the stronger is the trend) within a particular period specified in the settings. In general, that is what the rsi indicator buy and sell signals are based on.
RSI formula:
Step 1. The relative strength index calculates the range of the positive (U) and the negative (D) change in the price. I will explain the relative strength index formula below.
The period closes up, being a rising (positive) period if the current close is higher than the closing price of the previous period.
U = Price(i) - Price(i-1)
D = 0, where
Price(i) is the close price of the current period (i.e. current candlestick), Price(i-1) is the close of the previous period.
The period closes down, it is a falling (negative) period if the current close price is lower than the previous close.
U = 0
D = Price(i-1) - Price(i)
If both closing prices are equal, then U = 0, D = 0.
Step 2. Calculation of the relative strength.
RS = SMA(N) of U / SMA(N) of D
The formula means that the values of U and D are smoothed with a Simple Moving Average (SMA) with the N period. One of the sources gives a simplified formula: RS (Relative strength) is the ratio of the average gain to the average loss.
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| 2020-03-14 | aycorek | 67 | view |
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| 2019-08-10 | Bhawna Sharma | 73 | view |
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Comments
The RSI (Relative Strength…
The RSI (Relative Strength Index) indicator is a popular tool for technical analysis in forex trading. It's used to identify overbought or oversold conditions in the market, which can help traders make informed decisions about when to enter or exit trades. The RSI indicator is available on many trading platforms, including the popular MT4 platform. To use the RSI indicator, traders typically look for values above 70 to indicate an overbought condition, and values below 30 to indicate an oversold condition. Traders may also look for divergences between the RSI indicator and the price action of the currency pair, as these can provide additional signals for potential trend reversals. On the MT4 platform, the RSI indicator can be easily added to charts and customized to fit a trader's specific needs. The https://frfbs.com/trading/platforms/mt4ios app is a convenient tool for traders who want to monitor their trades and access their trading platform on-the-go.
Grammar and spelling errors:
Line 3, column 216, Rule ID: WHITESPACE_RULE
Message: Possible typo: you repeated a whitespace
Suggestion:
...d, where he described the technical tool Horizontal dotted lines are signal lines...
^^^
Line 7, column 1, Rule ID: ENGLISH_WORD_REPEAT_BEGINNING_RULE
Message: Three successive sentences begin with the same word. Reword the sentence or use a thesaurus to find a synonym.
...ght zone is between levels 70 and 100. The oversold zone is between the levels of ...
^^^
Transition Words or Phrases used:
first, if, so, then, well, i mean, in general
Attributes: Values AverageValues Percentages(Values/AverageValues)% => Comments
Performance on Part of Speech:
To be verbs : 32.0 13.1623246493 243% => Less to be verbs wanted.
Auxiliary verbs: 3.0 7.85571142285 38% => OK
Conjunction : 13.0 10.4138276553 125% => OK
Relative clauses : 5.0 7.30460921844 68% => More relative clauses wanted.
Pronoun: 12.0 24.0651302605 50% => OK
Preposition: 47.0 41.998997996 112% => OK
Nominalization: 5.0 8.3376753507 60% => More nominalizations (nouns with a suffix like: tion ment ence ance) wanted.
Performance on vocabulary words:
No of characters: 2248.0 1615.20841683 139% => OK
No of words: 450.0 315.596192385 143% => Less content wanted.
Chars per words: 4.99555555556 5.12529762239 97% => OK
Fourth root words length: 4.6057793516 4.20363070211 110% => OK
Word Length SD: 4.0581777692 2.80592935109 145% => OK
Unique words: 206.0 176.041082164 117% => OK
Unique words percentage: 0.457777777778 0.561755894193 81% => More unique words wanted or less content wanted.
syllable_count: 650.7 506.74238477 128% => OK
avg_syllables_per_word: 1.4 1.60771543086 87% => OK
A sentence (or a clause, phrase) starts by:
Pronoun: 7.0 5.43587174349 129% => OK
Article: 20.0 2.52805611222 791% => Less articles wanted as sentence beginning.
Subordination: 2.0 2.10420841683 95% => OK
Conjunction: 1.0 0.809619238477 124% => OK
Preposition: 3.0 4.76152304609 63% => OK
Performance on sentences:
How many sentences: 28.0 16.0721442886 174% => OK
Sentence length: 16.0 20.2975951904 79% => The Avg. Sentence Length is relatively short.
Sentence length SD: 44.1460121913 49.4020404114 89% => OK
Chars per sentence: 80.2857142857 106.682146367 75% => OK
Words per sentence: 16.0714285714 20.7667163134 77% => OK
Discourse Markers: 1.60714285714 7.06120827912 23% => More transition words/phrases wanted.
Paragraphs: 22.0 4.38176352705 502% => Less paragraphs wanted.
Language errors: 2.0 5.01903807615 40% => OK
Sentences with positive sentiment : 14.0 8.67935871743 161% => OK
Sentences with negative sentiment : 2.0 3.9879759519 50% => More negative sentences wanted.
Sentences with neutral sentiment: 13.0 3.4128256513 381% => Less facts, knowledge or examples wanted.
What are sentences with positive/Negative/neutral sentiment?
Coherence and Cohesion:
Essay topic to essay body coherence: 0.335576269766 0.244688304435 137% => OK
Sentence topic coherence: 0.0930927896208 0.084324248473 110% => OK
Sentence topic coherence SD: 0.120313340991 0.0667982634062 180% => OK
Paragraph topic coherence: 0.0888067099809 0.151304729494 59% => OK
Paragraph topic coherence SD: 0.117705880672 0.056905535591 207% => More connections among paragraphs wanted.
Essay readability:
automated_readability_index: 10.2 13.0946893788 78% => Automated_readability_index is low.
flesch_reading_ease: 72.16 50.2224549098 144% => OK
smog_index: 3.1 7.44779559118 42% => Smog_index is low.
flesch_kincaid_grade: 7.2 11.3001002004 64% => OK
coleman_liau_index: 11.42 12.4159519038 92% => OK
dale_chall_readability_score: 7.97 8.58950901804 93% => OK
difficult_words: 101.0 78.4519038076 129% => OK
linsear_write_formula: 8.5 9.78957915832 87% => OK
gunning_fog: 8.4 10.1190380762 83% => OK
text_standard: 8.0 10.7795591182 74% => OK
What are above readability scores?
---------------------
Maximum five paragraphs wanted.
Rates: 56.1797752809 out of 100
Scores by essay e-grader: 5.0 Out of 9
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Note: the e-grader does NOT examine the meaning of words and ideas. VIP users will receive further evaluations by advanced module of e-grader and human graders.