What is the RSI Indicator? And how does it reveal buying and selling areas?
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The RSI indicator or "Relative Strength Index" is one of the most important tools in technical analysis, used to measure the momentum of price movement and to determine whether a currency is in a state of overbought or oversold.
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How does RSI work?
The indicator moves between 0 and 100
If RSI reaches 70 or more ➜ the currency is considered to be in a state of overbought (potential correction or drop)
If it drops to 30 or less ➜ the currency is in a state of oversold (potential rebound and rise)
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Why is it useful?
It helps you enter and exit trades at the right time
It reveals potential reversal moments
It can be combined with support/resistance levels or other indicators like MACD for increased accuracy
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Important Warning:
> RSI should not be used alone to make entry or exit decisions… but as a confirmation tool within a comprehensive trading plan.
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Do you rely on RSI in your trading?
Share your experience with it or the best strategy you combined it with other indicators in the comments.