1. RSI
- Objective : To determine the true value of an oscillator and understanding overbought or oversold positions
- At the bottom of the chart , the RSI, on a scale of 0-100, indicates that the overbought position is at 70 and the oversold position is at 30. An investor may choose to reset the indicators' parameters to 80 and 20. This helps the investor be sure when making the decision to buy or sell an issue, and not "pull the trigger" too fast.
- Some traders have found that the RSI works best when it's compared to short-term moving-average (MA) crossovers. Using a 10-day MA with a 25-day MA, you may find that the crossovers indicating a shift in direction will occur very close to the times when the RSI is either in the 30/70 or 20/80 range; the times when it is showing either distinct overbought or oversold readings. Simply put, the RSI, sooner than almost anything else, indicates an upcoming reversal of a trend, either up or down.
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