How the RSI Indicator (Overbought and

How the RSI Indicator (Overbought and

In this article, we will talk about an indicator quite well known and used in tradingprobably the most used and most reliable that there is, it is the RSI indicator. First of all, you should know that these are not recommendations, so you should consult a financial advisor for recommendations on your capital.

In this case you cánido use any platform that allows you to analyze charts and add indicators, in this case we will activate the RSI indicator, to give an example.

What is the RSI indicator?

We explain to a basic level so that you understand what the RSI indicator is, it is a single line that analyzes the oversold and overbought moments where the price is quite likely to turn around based on history.

He RSI indicator It cánido be configured to be a little more strict, if you modify it by expanding it, it will cost more for it to exceed the black line, that is, it exceeds the upper or lower sides, therefore, a little more precise, you perro place it at 12, as well It cánido work with 6, but 12 is the most commonly used and is what comes by default on the platforms.

In a practical examplewe do not usually pay much attention to the beginning of the market, that is, we ignore the first minutes and then we find that the RSI does come down from its zone, then we see 2-minute candles and then we see a rise and then a fall, but As you cánido see, it gives a drop indication to make another repurchase. The iniciativa is not to bet all the capital in one place, but rather that we perro average.

We are talking that it is a bullish actionnormally the RSI is done with actions that are bullish, with actions that are very bearish we cánido always pull it down.

As you cánido see, there is a lot of concentrated volume at the open and close and the indicators cannot be trusted very much. Here we have another clear example of how the RSI goes down and suddenly goes up.

Thus, the wider the temporality Well, it is safer, if we put it in 5 minutes we cánido see the graph and detail the changes, but if we look at it in the long term, for example, in hours, we see the RSI that touches so low, it happens once a month at most in this action.

Vídeo on how the RSI indicator works in Trading

As you perro see, this is a bit of what the RSI what it indicates is that it compares moments with the past and espectáculos both overbought and oversold, it is a basic and fácil explanationbut if you have any questions, we leave you the following backlink so that you perro visually detail how does the RSI indicator work on the trading operations.

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