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Forex For Beginners

RSI

RSI ( Relative strength indicator ) is similar to the Stochastic technical indicator, it measures and indicates the overbought and oversold level of the currency pair or stock.

It is recommended using 70 and 30 moving averages in RSI as an overbought and oversold levels respectively. In general, if the RSI index rises above 30 ma level, it is considered bullish trend . Conversely, if the RSI index falls below 70, it is a bearish signal. Some traders identify the long-term trend and then use extreme readings for entry points. If the long-term trend is bullish, then oversold readings could mark potential entry points.

Some traders also use 50 ma the center line of RSI as an indicator to indicate bullish and bearish signal. If the readings above 50 indicates that it is an up trend and a reading below 50 indicates that it is a down trend.

There are many other chart indicators traders using in the market, we will not cover all of them, we only discuss the most popular and what the author is currently using.

Once you understand the concepts of these indicators, go and start playing with them in the chart. Seriously study and understand how each indicator reacts to the price movement.

Next, we shall look into more detail on Candlestick chart