RSI( Relative Strength Index)
Relative Strength Index was developed by J.Welles Wilder. Relative strength index measures the speed and change of price movements. Relative strength index ranges between 0 and 100. Relative strength index is based on oversold and overbought as well as divergence. According to Wilder,RSI is considered to be overbought when above 70 and oversold when below 30. RSI has a time default of 14 period. When below 30,it tells the trader that it is time to enter a buy position while when it is above 70,it tells the trader to enter a sell position. RSI is calculated using the following formulae; RSI= 100 - 100 1+RS where RS= Average Gain/ Average Loss The average gain and average loss are the basic component of RSI. Relative strength index ranges between 0 to 100.Since it is an oscillator and ranges between 0 to 100,it therefore has an oscillator between 30 to 70.When the RSI i...