Fibonacci Traders

Trading Fibonacci, fractals, RSI and CCI

 

RSI oscillator

 RSI is as Relative Strength Index or RSI oscillator.

  Image = stock chart displaying

  the RSI oscillator with overbought

  level set at seventy and oversold

  at thirty.

Developed J. Welles Wilder, it is a momentum oscillator like the slow stochastic

or Commodity hannel Index (CCI) indicator.

Its ultimate purpose is to pinpoint financial instruments that are extra bullish or
bearish.  Based on the RSI oscillator, a financial security is further bullish
when the magnitude of recent gains is greater than losses.  Moreover,
a stock is very bearish if the magnitude of recent losses surpasses prevailing
gains.

Just as soon as the RSI oscillator climbs and crosses above the fifty level, it
symbolizes a rush in bullish momentum.  Nevertheless, whenever it drops
and sinks beneath the fifty line, it implies an expansion in bearish sentiment.

Like different technical oscillators, the RSI oscillator does not grant direct
trading signals
, only warnings.  One should always trade the price action
instead of the momentum oscillator.  One may also utilize trading software
like TC2000 or Google finance stock screener to scan for bullish or bearish
stocks.

RSI oscillator: bullish trade setup

A trading structure is not a signal. When a bullish setup occurs, one will
verify it on the higher time frames (that are distinctive from the setups)
before completing the trading drill.
For example, if a bullish trading setup occurs on the daily chart, one
can review weekly and monthly charts to reinforce it with current market
patterns
.

RSI oscillator: conditions for a bullish setup


1/ the RSI oscillator closes above fifty,
2/ price exhibits a higher low after,
    a higher high or a bullish chart pattern,
3/ higher periods align.


RSI oscillator: bearish trade setup


Supposing that a financial security displays a lower high after a lower low
and the Relative Strength Index (RSI) oscillator plainly crosses below fifty;
such a thing is a bearish trade setup.  Once one confirms it, the ensuing step
is a meticulous top-down trading method.

View this video to understand more.

TitleRSI oscillator: bearish trade setup

Description:  RSI oscillator tips and tricks for recognising a bearish trade setup like a pro. 

Easily improve day and swing trade using the Relative Strength Index oscillator.  
First, one will focus on the price action, then the technical indicator before applying

a multiple time frames trading method.  mprove now.

 

RSI oscillator: overbought and oversold

Private financial market traders (or investors) and various prominent financial
institutions waste much time refining the RSI oscillator's settings.  The
aim is to smooth or optimize the oscillator, hence, identify healthy
oversold or overbought trading signals.  That is often a misuse of time.
Although, the settings should match the time frame, the most
relevant piece is to grasp how to trade the oversold RSI oscillator.


RSI oscillator: sense of oversold

From a technical perspective, at any time the RSI oscillator is oversold
(turns bullish), it flags that the price is at a support level or on the edge of

the lower band of the Bollinger bands (50, 2).   One ought to
verify if it is a decent support.  One will also draw a warning line on the
spot.  To avoid costly RSI oscillator trading mistakes, one can check the
higher time frames to approve the setup.

View the video

Title: How I Trade The Oversold RSI Indicator Like A Pro

 

 

Warning

Quite often, the RSI oscillator is oversold if the price is still in a declining
channel.  Hence, it is prudent to expect for a higher low outside the channel
(unless the price forms a double bottom chart pattern at a critical support
level).


RSI oscillator: meaning of overbought


When the RSI oscillator is overbought (above 70), it is indicating that the

price is at resistance or near the upper band of the Bollinger bands (50, 2).

However, if the resistance is breached plus price gains support, the RSI
oscillator
may remain overbought for a sustained duration.  That phenomenon
is typical during robust bullish rises such as the third or extended first and fifth
Elliott waves
(Author of this aricle = George Beaulieu)

  Image = Apple Computers stock's monthly

    chart with an overbought RSI oscillator

    period fourteen during the third Elliott

    wave



Contrary to the widespread theory, one will grant precedence to bullish signals
if the price gains support above that primary resistance.

RSI oscillator: common trading mistakes

1/ sell each occasion the RSI oscillator is overbought,
2/ buy every moment the RSI oscillator is oversold,
3/ persistently sell during a lengthened bullish progress while the RSI
    oscillator
is overbought for a long time,
4/ be a bold bullish trader since the RSI indicator is oversold for an
    extensive period,
5/ trading the RSI oscillator instead of the price,
6/ consistently neglecting the top down trading method when employing
    the RSI oscillator for swing trading ideas,
7/ no attempt to check economic news or fundamentals, but instead using the RSI
    oscillator
on it own,
8/ selling each one overbought RSI oscillator in a ascending channel,
9/ being bullish as the RSI oscillator is oversold while the market pattern is
    a declining channel,
10/ failing to take advantage of those excellent RSI trading setups during a
      consolidation phase,
11/ at no time bother to valid bullish or bearish RSI oscillator trade setups
      on higher time frames,
12/ replicating the identical RSI oscillator trading errors without seeking to recover.

View the video

Title:  How To Avoid RSI Indicator Mistakes

 

 

 

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