RSI (Relative Strength Index) is one of the most widely used trading
It is a momentum oscillator that measures the speed and change of price movements. The RSI calculates the ratio of upward movements to downward movements. It can have a reading from 0-100.
So, what does it tell you
You can use the RSI to identify the general trend and the best price to enter or exit a trade. A reading of 30 or less could mean that the instrument is oversold – the prices have fallen lower than expected. A reading of 70 or higher could mean that the instrument is overbought – the prices increased higher than the market expectations.
Don’t misuse the indicator
The RSI is one of the most misused indicators by novice traders. It’s tempting to enter the markets using RSI but be cautious. Try and test different parameters and educate yourself on properly interpreting indicators before jumping in the markets.