🔷 Analysis Indicators Explanation Series 📊
No. 1️⃣
Name: #RSI (Relative Strength Index)
Work: Measures the strength of the currency
Category: Basic Indicators
∆ Explanation of the {RSI} indicator:
It is a technical indicator used in financial market analysis to measure the severity of price changes. Here is a simple and brief explanation:
∆ How {RSI} works:
1. The indicator calculates the arithmetic average of price increases over a specific period of time (usually 14 days).
2. The indicator calculates the arithmetic average of price decreases over the same period.
3. The indicator compares the two averages to determine the strength of supply and demand.
∆ Reading the {RSI} indicator:
1. RSI value between 0 and 100.
2. RSI value above 70: An indicator of supply (selling).
3. RSI value below 30: An indicator of demand (buy).
4. RSI value between 30 and 70: An indicator of supply and demand balance.
∆ Types of {RSI} signals:
1. Buy signal: RSI crosses 30 from below.
2. Sell signal: RSI crosses 70 from above.
3. Volatility signal: RSI crosses 50.
∆ Advantages of {RSI} indicator:
1. Helps in determining supply and demand.
2. Helps in identifying trends.
3. Can be used with other indicators.
∆ Disadvantages of {RSI} indicator:
1. Does not rely on fundamental analysis.
2. Can show false signals.
3. Does not rely on short-term fluctuations.
∆ Tips:
1. Use RSI with other indicators.
2. Choose an appropriate time period.
3. Follow market news and other analysis.
