Relative Strength Index (RSI)

15 Feb at 12:38

The RSI is a trend indicator.

To use the RSI, it is first necessary to draw four lines that will form its supports and resistances. In the graph, these are the green lines 75 and 35 and the red lines at 25 and 65.

Relative Strength Index (RSI)

When the RSI is in the upper part, that is to say between the green lines (35 and 75), the trend is up. When the RSI is in the lower part, that is to say between the red lines (25 and 65), the trend is bearish.

Now, observe the breaks in the lines.

To validate a downtrend, RSI has to break the support 35 with volume (see graph). The breaking of 35 is very clear. Due to the break of bar 35, the RSI can be found in the channel 25-65 which is a bearish channel, in effect, the price is down.

Then, on the graph, we observe a very clear break of the resistance of 65 (see graph), so the RSI can be found in the channel 35-75, the trend is validated and the price rises.

When the trend is bearish, that is to say between the red lines, if the RSI approaches or touches the red line of 65 without crossing it, the same trend is verified and confirmed.
When the trend is up, that is to say between the green lines, if the RSI approaches or touches the green line support 35 without crossing it, the trend is verified and confirmed.

This analysis constitutes one of the many uses of RSI.

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