Booming Bulls
In this video, Anish Singh Thakur explains the Relative Strength Index (RSI) indicator for trading. He shows how to use RSI on www.tradingview.com, sets the inputs and style, and explains the meaning of RSI in determining market momentum. RSI above 60 indicates a bull market, below 40 indicates a bear market, and between 60-40 is a no trading range.
RSI Indicator: An Introduction to Relative Strength Index
Introduction
The Relative Strength Index, commonly known as RSI, is a technical analysis tool used for identifying overbought or oversold conditions in the market. In simple terms, the RSI helps traders to determine whether a stock is likely to move up or down, based on its momentum. In this article, we will discuss the basics of RSI and how to use it in intraday trading.
Getting Started with RSI
To use the RSI indicator, we first need to access a charting website. In this case, we will be using www.tradingview.com, which is a popular website among traders. Once you have accessed the website, simply type in the name of your preferred stock in the search box and click on the “full-featured chart” option.
Setting Up the RSI Indicator
Now that we have our chart ready, we can begin setting up our RSI indicator. To do this, click on the “FX” or “indicators” option at the top of your screen and type in “RSI. A list of RSI options will appear, and you should select the simple relative strength index.
Next, click on “Settings” and scroll down to “Input”. Here, you can leave all the default settings as they are, including the resolution, length, and source. However, it’s important to note that the closing price is always the most important factor to consider when analyzing a stock’s momentum.
Moving on to the “Style” section, you will see a zone from zero to one hundred and a pink band in the middle. The color of the pink band can be changed, but it’s recommended to leave it as is. The upper and lower bands are initially set to 70-30 but should be changed to 60-40 for intraday trading purposes. Once you have adjusted these settings, click on “OK” and save the changes as your default settings.
Understanding RSI
The RSI is a momentum oscillator that ranges from 0 to 100. When the RSI value is above 60, it suggests that the stock is bullish or has an upward trend. On the other hand, a value below 40 indicates that the stock is bearish or has a downward trend. If the RSI is between 60 and 40, the stock is said to be in a range-bound market, giving traders fewer trading opportunities.
Using RSI in Trading
Now that we understand how the RSI works, we can use it as a technical analysis tool to make trading decisions. For instance, if the RSI value is above 60, it’s a good time to buy the stock since it’s likely to continue with its upward trend. Conversely, if the RSI value is below 40, it’s best to avoid buying the stock, as it’s likely to continue with its downward trend.
Conclusion
The RSI indicator is a valuable technical analysis tool that helps traders to determine whether a stock is bullish or bearish based on its momentum. By understanding the basics of RSI and how to use it in intraday trading, traders can make informed trading decisions that can lead to profitability.
Author note: I hope this article has given you a better understanding of the RSI indicator and how to use it in trading. Good luck with your trades!
Important Update
Before ending this article, I want to share an exciting piece of news with you. In my upcoming video, I will be discussing advanced trading strategies that you can use to improve your trading results. So, keep an eye out for my next video and stay tuned for more important updates!
