Trading Essentials - RSI and Thoughts on China Market

Its been a while since my last sharing, thought of sharing some Technical Indicators usually used in Technical Analysis that some new investors could incorporate into their trading too! Likewise, meant to be layman terms and the way I've learnt this might be very different from seasoned investors.

Introducing the Relative Strength Index, or RSI for short. The RSI is often used as an indicator of strength. From how I was taught, there are 3 main areas for the RSI to take note off and it can be seen marked by the dotted lines in the screenshot below:

1) The centreline, this is at 50

2) The BULL control zone, this is the green coloured area below, which falls from 65 to 80. Anything above 80 is what we will call OVERBOUGHT, which usually follows up with downside movement

3) The BEAR control zone, this is the red colour area below, which falls from 35 to 20. Anything below 20 is what we call OVERSOLD, which usually follows up with upside movement

In general, the centreline is a baseline to see the market sentiments, i.e. if RSI is above the centreline, its an indication that price is likely going to go up. The BULL control zone and BEAR control zone tells you respectively who is generally in control of the market and the longer the RSI stays in that zone, price is usually more than likely to follow in that direction.

This sharing unfortunately doesn't do the RSI justice as I don't want to overshare and bore you guys, but I hope this makes you all interested in learning more of this beautiful indicator!