one of the great oscillators available for trading markets.some tips to use it:
(PLEASE REMBER THE BEST INDICATOR IS UR MIND,CONTROL THAT )
- I have found that using 20-80 parameter as oversold/overbought and 50 as the average range works well from INTRA TO MONTHLY CHARTS.
- please remember that cross of 20 or 80 does not mean that the market can be bought or shorted , but just that it moves now into the respective zones where care should be taken of the running trade.
- the reverse trade only taken when the rsi crosses 80 downwards/or rises from 20 upwards.
- crossover of rsi/average line closely monitered and wait for cross of 20/80 levels for trade.
- when RSI is losing strenght despite of the price going higher /lower it shows that negative/positive divergence has started and the present positions should be liquidated & contrarian direction can be initiated when other signels also confirm.
- cross of RSI over / below 50 line means that the trend is picking strenght , more positions shoould be added at this level as the direction has been set.
- it can remain overbought /oversold for long in a heavy trending market so very low/high rsi levels does not signel a contranian trade.
- its a slow indicator and best parameter is 14-1(60 mins or above), for intra day i use 5-3 for volatile markets in 10 mins time frame.
