RSI metrics (more detailed description)
The relative strength index (RSI) is made by Wells. Wells Wider created a technical index which calculates the comparison of buying and selling power in the market through the changes of stock prices in a specific period to judge the internal nature of stock prices and speculate the direction of price changes in the future.
The derivation process of the formula is as follows: relative strength index (RSI) = (average of total increases within N days / average of total increases and decreases within N days) * 100% general short-term RSI is set at Niss6, and long-term RSI is set at Niss12.
The RSI value always varies from 0 to 100. The variation range of RSI is between 0mi 100, and the value of strong and weak index is generally distributed between 20 and 80.
80MUR 100 strong sellers have reached an overbought state.
The top 50 Murray 80 buy normal multi-market.
20 Mel 50 weak wait and see there is no need to rush to jail
The purchase below 30 is considered to be oversold, and the market will bounce back.
Practical application of RSI
1. In the long-term changing process of the market, the range of RSI is between 30 and 70 in most of the time, among which there are the most opportunities between 40 and 60, and the chances of more than 80 or less than 20 are very small.
2. After a period of decline in the market, RSI continues to fall from a high to below 30, if it breaks through 60 from that low and is confirmed, it shows that the bulls have regained the upper hand and continue to move upward after it rebounded to between 40 and 60 again.
3. When the market goes through a period of rally and RSI continues to rise from a low to more than 80, if it falls below 40 from this high and is confirmed, it shows that the short force has regained the upper hand. In general, when it rebounds again to between 40 and 60, it will continue to move downwards.
4. In the bullish market, RSI falls and consolidates every time the market pulls back, resulting in a dense area of lows, which is also a line of defense for bulls.
5. Within the short market (downtrend), during the period of rebound and consolidation, the high point of RSI is also a line of defense for bears. (rebound pressure level)
6. After the market weakens, in the RSI graph, each rebound vertex generally shows a trend of one top less than one top, connecting two adjacent vertices and extending to the lower right, it will form a rising resistance line, if the angle is not too steep, its reverse pressure effect will be very effective. The counterattack of the bulls is generally difficult to break through this resistance line, once the successful breakthrough and stand firm above it, it shows that the general trend is about to strengthen.
7. During the slow rise of the market, there is a rollback or consolidation to form a support line to the lowest point on the upper right, which is generally difficult to break through. Once a breakthrough is made, it indicates that the downtrend is weakening.
8, the bullish market, the highest point of RSI is generally between 75 and 90, the market rollback, as long as it is not sudden bad news resulting in a sharp fall in the market, RSI generally will not fall below 30.
9. In the short market, the lowest point of RSI is generally 30 or less, and the market rebounds. As long as it is not the sudden good news that leads to a sharp rise in the market, RSI generally does not break through 70, mostly below 55.
10. Signs are formed at the head or bottom: when the RSI value rises above 80 or falls below 20, the figure of RSI usually appears the sign of reaching the top or bottom earlier than the head or bottom of the actual market (that is, K-line graph), that is, over 80% is overbought and below 20% is oversold. If the RSI is lower than 20 and the trading value has shrunk extremely for several consecutive days, it is a buy signal. In the long market, it is still possible for RSI to reach more than 80 in time and continue to rise, which must be supplemented by other technical analysis indicators such as the moving average (5-day or 10-day moving average) to determine whether it is time to sell.
11, the SSI value has been above 80, and the price does not fall below the 10 moving average, can still continue to hold positions, otherwise, as falling below the upward trend, should be sold immediately.
12. Graphic shape: the figure of RSI is clearer than that of bar chart (or K chart), such as head and shoulder top (bottom), triangular flag, double head, double bottom and so on. It is easier to judge breakthroughs, buying points and selling points. If the RSI presents the head-shoulder top or M-head shape near 80, it must be sold out, and the head-shoulder top or W-bottom shape around 20 can be pursued.
13. During the finishing period, the RSI is higher than the bottom, and the momentum of the bulls is strong, and the latter trend is more likely to rise for a period of time, which is the time to buy. On the contrary, RSI is lower than the bottom, the momentum of the bulls is weakening, the possibility of decline is high, and it is time to sell.
14. Weakness reversal: the reversal of SSI above 80 or below 20 is a strong signal of the reversal of market trend.
15. The highest point that once appeared in the RSI graph has a strong reverse pressure effect. The lowest point that ever appeared in the RSI graph has a strong supporting effect.
16, the price innovation high, continues to rise, within 3 days RSI is unable to break through the previous high, and even deviates from the phenomenon, as the bulls pull up weak, for selling time.
17. Deviation signal: in the actual figure (K diagram), the head is higher than the other, but when the curve of the RSI is lower than the other, it is the "deviation signal". This deviation shows a false rise in prices, which usually means a harbinger of a reversal and decline.
18. It can also be combined with two fast and slow RSI to determine the buying and selling time, such as 6-day and 12-day RSI. When the 6-day line breaks through the 12-day SSI line, it is the buying time. When the 6th SSI line falls below the 12th line, it is the time to sell. In particular, watch out for buy signals below 30 or sell signals above 70 are extremely reliable. (gold fork and dead fork)
Deviation of indicators
The deviation of the relative strength index means that the trend of the curve of the RSI index is exactly opposite to that of the stock price K chart. The deviation of relative strength index can be divided into two types: top deviation and bottom deviation.
1. Parietal deviation
When the relative strength index RSI is at a high level, but after creating a recent high of RSI, it forms a trend that one peak is lower than one peak, while the stock price on the K chart reaches a new high again, forming a trend that is higher than one peak, which is the top deviation. The phenomenon of top deviation is generally a signal that the stock price is about to reverse at the high level, indicating that the stock price is about to fall in the short term, which is a sell signal.
two。 Bottom deviation
The bottom deviation of the relative strength index generally occurs in the low area below 20. When the stock price on the K chart falls all the way, forming a trend that is lower than one wave, while the RSI line takes the lead in stopping the decline and stabilizing at the low level, and forms a trend higher than the bottom, this is the bottom deviation. The phenomenon of bottom deviation generally indicates that the stock price may rebound in the short term, which is a signal of short-term buying.
To sum up, the relative strength index is a kind of overbought and oversold index to judge the buying and selling point indicated by the market trend.
When investors use the relative strength index, they need to be very proficient in its principle, formula and application principle, especially when using the special analysis method of the relative strength index to analyze the buying and selling point, they should pay attention to the combination analysis with reference to other indicators so as to realize the flexible use of the index.
The derivation process of the formula is as follows: relative strength index (RSI) = (average of total increases within N days / average of total increases and decreases within N days) * 100% general short-term RSI is set at Niss6, and long-term RSI is set at Niss12.
The RSI value always varies from 0 to 100. The variation range of RSI is between 0mi 100, and the value of strong and weak index is generally distributed between 20 and 80.
80MUR 100 strong sellers have reached an overbought state.
The top 50 Murray 80 buy normal multi-market.
20 Mel 50 weak wait and see there is no need to rush to jail
The purchase below 30 is considered to be oversold, and the market will bounce back.
Practical application of RSI
1. In the long-term changing process of the market, the range of RSI is between 30 and 70 in most of the time, among which there are the most opportunities between 40 and 60, and the chances of more than 80 or less than 20 are very small.
2. After a period of decline in the market, RSI continues to fall from a high to below 30, if it breaks through 60 from that low and is confirmed, it shows that the bulls have regained the upper hand and continue to move upward after it rebounded to between 40 and 60 again.
3. When the market goes through a period of rally and RSI continues to rise from a low to more than 80, if it falls below 40 from this high and is confirmed, it shows that the short force has regained the upper hand. In general, when it rebounds again to between 40 and 60, it will continue to move downwards.
4. In the bullish market, RSI falls and consolidates every time the market pulls back, resulting in a dense area of lows, which is also a line of defense for bulls.
5. Within the short market (downtrend), during the period of rebound and consolidation, the high point of RSI is also a line of defense for bears. (rebound pressure level)
6. After the market weakens, in the RSI graph, each rebound vertex generally shows a trend of one top less than one top, connecting two adjacent vertices and extending to the lower right, it will form a rising resistance line, if the angle is not too steep, its reverse pressure effect will be very effective. The counterattack of the bulls is generally difficult to break through this resistance line, once the successful breakthrough and stand firm above it, it shows that the general trend is about to strengthen.
7. During the slow rise of the market, there is a rollback or consolidation to form a support line to the lowest point on the upper right, which is generally difficult to break through. Once a breakthrough is made, it indicates that the downtrend is weakening.
8, the bullish market, the highest point of RSI is generally between 75 and 90, the market rollback, as long as it is not sudden bad news resulting in a sharp fall in the market, RSI generally will not fall below 30.
9. In the short market, the lowest point of RSI is generally 30 or less, and the market rebounds. As long as it is not the sudden good news that leads to a sharp rise in the market, RSI generally does not break through 70, mostly below 55.
10. Signs are formed at the head or bottom: when the RSI value rises above 80 or falls below 20, the figure of RSI usually appears the sign of reaching the top or bottom earlier than the head or bottom of the actual market (that is, K-line graph), that is, over 80% is overbought and below 20% is oversold. If the RSI is lower than 20 and the trading value has shrunk extremely for several consecutive days, it is a buy signal. In the long market, it is still possible for RSI to reach more than 80 in time and continue to rise, which must be supplemented by other technical analysis indicators such as the moving average (5-day or 10-day moving average) to determine whether it is time to sell.
11, the SSI value has been above 80, and the price does not fall below the 10 moving average, can still continue to hold positions, otherwise, as falling below the upward trend, should be sold immediately.
12. Graphic shape: the figure of RSI is clearer than that of bar chart (or K chart), such as head and shoulder top (bottom), triangular flag, double head, double bottom and so on. It is easier to judge breakthroughs, buying points and selling points. If the RSI presents the head-shoulder top or M-head shape near 80, it must be sold out, and the head-shoulder top or W-bottom shape around 20 can be pursued.
13. During the finishing period, the RSI is higher than the bottom, and the momentum of the bulls is strong, and the latter trend is more likely to rise for a period of time, which is the time to buy. On the contrary, RSI is lower than the bottom, the momentum of the bulls is weakening, the possibility of decline is high, and it is time to sell.
14. Weakness reversal: the reversal of SSI above 80 or below 20 is a strong signal of the reversal of market trend.
15. The highest point that once appeared in the RSI graph has a strong reverse pressure effect. The lowest point that ever appeared in the RSI graph has a strong supporting effect.
16, the price innovation high, continues to rise, within 3 days RSI is unable to break through the previous high, and even deviates from the phenomenon, as the bulls pull up weak, for selling time.
17. Deviation signal: in the actual figure (K diagram), the head is higher than the other, but when the curve of the RSI is lower than the other, it is the "deviation signal". This deviation shows a false rise in prices, which usually means a harbinger of a reversal and decline.
18. It can also be combined with two fast and slow RSI to determine the buying and selling time, such as 6-day and 12-day RSI. When the 6-day line breaks through the 12-day SSI line, it is the buying time. When the 6th SSI line falls below the 12th line, it is the time to sell. In particular, watch out for buy signals below 30 or sell signals above 70 are extremely reliable. (gold fork and dead fork)
Deviation of indicators
The deviation of the relative strength index means that the trend of the curve of the RSI index is exactly opposite to that of the stock price K chart. The deviation of relative strength index can be divided into two types: top deviation and bottom deviation.
1. Parietal deviation
When the relative strength index RSI is at a high level, but after creating a recent high of RSI, it forms a trend that one peak is lower than one peak, while the stock price on the K chart reaches a new high again, forming a trend that is higher than one peak, which is the top deviation. The phenomenon of top deviation is generally a signal that the stock price is about to reverse at the high level, indicating that the stock price is about to fall in the short term, which is a sell signal.
two。 Bottom deviation
The bottom deviation of the relative strength index generally occurs in the low area below 20. When the stock price on the K chart falls all the way, forming a trend that is lower than one wave, while the RSI line takes the lead in stopping the decline and stabilizing at the low level, and forms a trend higher than the bottom, this is the bottom deviation. The phenomenon of bottom deviation generally indicates that the stock price may rebound in the short term, which is a signal of short-term buying.
To sum up, the relative strength index is a kind of overbought and oversold index to judge the buying and selling point indicated by the market trend.
When investors use the relative strength index, they need to be very proficient in its principle, formula and application principle, especially when using the special analysis method of the relative strength index to analyze the buying and selling point, they should pay attention to the combination analysis with reference to other indicators so as to realize the flexible use of the index.
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