Secrets


of Trading

with RSI
Relative Strength
Index
The RSI, or Relative Strength Index, was
developed by the famous trader J. Welles
Wilder in 1978. The indicator gained huge
popularity among traders and has been

in demand until now, being one of the
most frequently used technical analyses
tools.
Nature of RSI

By its nature, the RSI is an oscillator.


It fluctuates in a certain zone, limited


by the maximum (100) and minimum (0).

• the stronger the upward movement


of the price, the closer the indicator value

is to 100;

• the stronger the downward movement


of the price, the closer the indicator value

is to 0.

This indicator displays the momentum:


the speed and amplitude with which the

price movement changes.

In other words, the RSI shows the strength

of the trend and the probability of its

change.

Levels are important

As already mentioned, the RSI ranges from
0 to 100. But no less important values are
the levels of 30 and 70.

If the indicator value rises to 70 and above,

the asset is overbought, and it is unwise

to enter into trades now. The same works

if the indicator drops to level 30 and below.

It happens that the RSI is in the

overbought or oversold zone for quite

a long time, so you need to filter the
signals either by changing the indicator
settings or using other indicators and
technical analysis methods.

The situation
The indicator crossed the level 70 upwards,
but we already know that it can be above
this level for quite a long time. So, what

do we do in this case?

We will search for opportunities to trade

down when the indicator crosses level 70
from top to bottom. In this case, we have
more confidence that the trend's strength
has changed downward.

Vice versa: the indicator value has crossed

the level 30 downwards. We will wait until
it crosses level 30 from the bottom up, and
only then do we look for entry points into
the market.
Another way to use RSI
Another purpose of the RSI is to find the
direction of the current trend.

If the indicator value crosses level 50, the

trend changes. Therefore, if you want

to ensure that the trend is upward, but you
have doubts, wait until the RSI crosses level
50 up.

The opposite is when looking for


a downward trend. Any doubts? Wait until
the RSI drops below level 50, and this
moment will give you another argument
that the trend is downward.
Strategy
RSI + MA Cross

Tools:

RSI (default settings).

Moving Average 1. Period: 4.

Moving Average 2. Period: 13.

Trade UP when:
1 Two Moving Averages cross.
2 RSI is on level 50 or nearby and
grows up.
Trade DOWN when:

1 Two Moving Averages cross down.

2 RSI is on level 50 or nearby and

falls down.

To ensure the signals are correct, wait for

2-3 candles after MAs cross each other.

Remember, all the strategies have


an advisory character. Keep the

potential financial risks in mind.

Secrets

of Trading

with RSI

Caution!
This article is not intended 

to be investment advice. 

No strategy can guarantee 100%

correct trading results. 

A successful trading result 

in the past is not a guarantee that

it will be repeated in the future.
Any information contained 

in this article is for informational 

purposes only.