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§5.11 RSI indicator or a Relative Strength Indicator

The RSI as well as Stochastic indicators yield their best results only when the market is in the channel. Besides it can be used to understand current market conditions. It looks similar to the RAVI indicator, namely: the indicator itself is a wavy line enclosed by two straight lines. If it enters an overbought area (above the upper line) then there is an uptrend in the market but a downtrend can occur in a short time. When the lower line is crossed, the opposite will occur.

Such an indicator is not accidentally called a Relative Strength Index because it only helps to identify which market trends are stronger – buying, selling or flat trends.

The indicator is very easy to use and

The indicator is very easy to use and this makes it very popular. In the case of proper setup it will send you signals which will help you to make correct market analysis and make the right decisions based on such analysis.One can often see the indicator in the form of a histogram which has vertical little lines that indicate trend direction and strength. This version can also be considered as useful and convenient for a trader.

§5.12 Ichimoku indicator→