RSI or Relative Strength Index Indicator is a trend indicator that is widely used by traders to predict the movement of a security price.
In this article, I will cover everything about the RSI Indicator and how you can use the indicator properly on the Pocket Option trading platform.
What exactly is the RSI Indicator?
RSI or call it Relative Strength Index Indictaor is a trend indicator that was developed by J.Welles Wilder.
This indicator is a Momentum indicator that oscillates between 0 to 100 and is typically used in identifying the Overbought and Oversold levels.
The default period of the indicator is 14 and is made from a moving average line via which you can analyse the security price movement and predict the upcoming trends and reversals.
How to find and set the RSI Indicator on the Pocket Option
You can RSI Indicator on Pocket Option for free. You just need access to your Pocket Option use this link and create a new Pocket Option account and get access to multiple indicators like RSI for free. Once you have got the access just click on the indicator button at the top of the page and find and click from the list.
You can also change the indicator line colour and increase the visibility of the same by clicking on 2px or 3px.
About Overbought and Oversold levels
Overbought and Oversold levels are the two most important concepts that you need to understand If you really want to trade properly with RSI.
The Moving Average line in the RSI Indicator oscillates around lines 0 -100.
When the moving average line is below 30 It means that the security price is currently at the oversold level.
Similarly, When the moving average line is above 70 It means that the security price is currently at the overbought level.
Now, you must be wondering What are Overbought and Oversold levels,
The Oversold Level is the price level which suggests that the security price has reached the minimum level and from here the price is most likely to bounce back up.
Similarly, The Overbought level is just the opposite of the Oversold Level, The Overbought level is the price level that suggests that the security price has already reached the maximum level and from here the price is most likely to bounce back down.
Placing Trades with RSI Indicator
Trading with RSI Indictaor is not a big deal.
As I said above, RSI Indictaor is made from a single moving average line that oscillates around 0-100.
Using this movement you can easily identify the best up and down opportunities.
When the moving average line is below the line or near 30 it signals an upcoming bullish force so, you can this opportunity to place a buy trade.
Similarly, When the moving average line is above or near line 70 it signals an upcoming bearish force and you can use this opportunity to place a sell trade.