The Relative Strength Index, RSI indicator is the most popular indicator and it is a momentum oscillator and a trend following indicator. The RSI indicator compares a trading currency magnitude of the recent price gains against its magnitude of recent losses price losses and plots this data on a scale of values that ranges between 0-100.
The RSI indicator measures the momentum of a currency pair; values above 50 signify bullish momentum while values below 50 center-line signify bearish momentum.
- The RSI Indicator is plotted as a green line
- Horizontal dashed lines are drawn to identifying overbought and oversold levels are i.e. 70/30 levels respectively.
Technical Analysis of RSI Technical Indicator
There are several methods used to trade with the RSI technical indicator, these are:
50-level Crossover Signals
- Buy signal - when the RSI indicator crosses above 50 a buy/bullish signal is given.
- Sell Signal - when the RSI indicator crosses below 50 a sell/bearish signal is given.