In this THREAD I will explain “Basic Trading Indicators”
1. RSI
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1. RSI
A Bullish Divergence occurs when the security makes a Lower Low but the indicator forms a Higher Low.
A Bearish Divergence occurs when price makes a Higher High but the RSI makes a Lower High
1.1 RSI
CRSI is an indicator that identifies overbought and oversold conditions, useful for short-term trading.
It combines elements of
- Relative Strength Index (RSI),
- Rate of Change (ROC)
- And the difference between the closing price and a moving average closing price
1.2 RSI
The RSI, measures the magnitude of recent price changes to determine overbought or oversold conditions
When price and RSI diverge, it suggests that the current trend may be losing steam and could be about to reverse
Useful to identify HIGHS and LOWS of the structure
1.3 RSI
Bullish RSI divergence signals a potential upward price movement.
Bullish divergence: Price makes a new low, but the RSI makes a higher low, suggesting a potential uptrend
1.4 RSI
By integrating Support and Resistance levels with RSI to gauge trend momentum, you can enhance your entry points significantly.
There are some RSI indicators that directly mark the existing Supports and Resistances on the chart.
1.5 RSI
This RSI Indicators draws Supply and Demand zones based on the RSI indicator.
For example if RSI is under 30 a Demand zone is drawn on the chart.
If the RSI is above 70 a Supply Zone is drawn on the chart.
This Indicator is really useful to identify reversals.
1.6 RSI
Bollinger Bands provide a visual representation of volatility, while RSI measures momentum.
This combination can help traders confirm overbought or oversold conditions and trend reversals.
When the RSI exceeds the upper band it means price is overbought