The Relative Strength Index is one of the most popular technical indicators. It belongs to the group of oscillators, the so-called momentum indicators.
What is the RSI indicator?
The Relative Strength Index (RSI) is a technical analysis indicator that shows the intensity and reversibility of a trend. The purpose of RSI is to measure the relative strength or weakness of a price chart. This is also one of the simplest ways you can pick the bottom and top of the market when trading at the Olymp Trade
In terms of form, this indicator is a drawing line that runs along the chart and moves in a corridor of values from 30 to 70. Occasionally, the RSI crosses the corridor and touches the extreme upper or lower value.
When RSI is below 30 (below the green line), it means that the market is entering the oversold territory. The sellers are dominant but the price will fall miserably.
When RSI is above 70 (above the red line), it means that the market is entering the overbought territory. The buyers are dominant and the price will rise sharply
Set up RSI indicators at Olymp Trade
On the indicator tab at Olymp Trade interface. You choose RSI
Olymp Trade sets the RSI to be a purple line. Move and cut through 3 horizontal lines which are green (line 30), white (line 50) and red (line 70)
Instructions to use RSI indicators when trading at Olymp Trade
RSI is an oscillating indicator. We can use this indicator to find the price at which the trend will reverse. From there, choose the right time to open the trading order
Open a DOWN trade when RSI plunges off the red line from the upper 70 territory.
Because the buyers are dominant, the price will be pushed up. When the price is too high, RSI will surpass the 70 line. This will make the buyers reluctant to buy more. The price will be adjusted and reverse to fall. It’s the time for you to open a DOWN trade.
Open an UP trade when RSI dashes out of the green line from the lower 30 territory
Because the sellers are dominant, the price falls out of the 30 territory. The buyers are waiting for cheaper prices to buy. The sellers also slacken their hands to sell more. So the price will go up. This is when you open an UP trade
Divergence of RSI indicator in Olymp Trade
This is the most reliable signal when you use the RSI indicator. Because when the current divergence occurs, the reversal probability of price is about 90%.
For example: The price is increasing but RSI declines. This is a sign of RSI divergence. Prices will fall soon after that. Let’s open a long DOWN trade. This is the best way to gain profit if you trading Olymp Trade with RSI indicator.
Experience how to trade RSI in Olymp Trade by registering here. Good luck!