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RSI Strategy Guide

The Relative Strength Index (RSI) is a momentum indicator that measures recent price changes to determine if an asset is overbought or oversold. It ranges from 0 to 100, with readings below 30 indicating an asset is oversold and above 70 indicating an asset is overbought. Crossings of the RSI line above and below 30 or 70 can create buy and sell signals. The RSI strategy looks for pullback entries within trends when the RSI crosses these levels, trades ranges as the price moves between the 30 and 70 zones, and also considers divergences between the trendline and RSI line as signals of potential trend reversals.

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Hanumantha Reddy Bellary
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101 views3 pages

RSI Strategy Guide

The Relative Strength Index (RSI) is a momentum indicator that measures recent price changes to determine if an asset is overbought or oversold. It ranges from 0 to 100, with readings below 30 indicating an asset is oversold and above 70 indicating an asset is overbought. Crossings of the RSI line above and below 30 or 70 can create buy and sell signals. The RSI strategy looks for pullback entries within trends when the RSI crosses these levels, trades ranges as the price moves between the 30 and 70 zones, and also considers divergences between the trendline and RSI line as signals of potential trend reversals.

Uploaded by

Hanumantha Reddy Bellary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Relative Strength Index (RSI)

Strategy Guide
WHAT IS THE RSI INDICATOR?
• A momentum indicator that measures the magnitude of recent changes in an
asset’s price.
• Can indicate when an asset is overbought or oversold.

• Should be used in conjunction with other indicators.

HOW DOES IT WORK?


• RSI rises when the number and size of positive closes increase.

• RSI drops when the number and size of losses increase.

• The indicator ranges between 0 and 100.

• < 30 can indicate oversold and > 70 can indicate overbought.

• Buy and sell signals can be created when the RSI line crosses the 30 and 70 lines.

(RSI in MetaTrader 4: Insert > Indicators > Oscillators > Relative Strength Index)

Formula
(No need to know this as your trading platform will do the calculations)

Start your free trial with ForexSignals.com today!


The information provided within this PDF is for educational purposes only.
RSI INDICATOR STRATEGY
EXAMPLES

1. With-trend Entry

• In a high-timeframe uptrend, when RSI crosses below and then back above the 30 line
on the lower timeframe, it can indicate a pullback entry.

• In a high-timeframe downtrend, when RSI crosses above and then back below the 70
line on the lower timeframe, it can indicate a pullback entry.

Start your free trial with ForexSignals.com today!


The information provided within this PDF is for educational purposes only.
RSI INDICATOR STRATEGY
EXAMPLES

2. Range Trading

• Enter at support and resistance as the price crosses into and out of the 30 and 70 zones.

3. Counter Trend with RSI Divergence

• When the trendline and RSI line diverge it can indicate trend reversal.

Start your free trial with ForexSignals.com today!


The information provided within this PDF is for educational purposes only.

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