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The RSI or Relative Strength Index indicator is bounded momentum based relative strength indicator rsi and binary options indicator that attempts to predict a change in momentum. The RSI value oscillates between 0 to and is calculated using the average gains and losses of an asset over a predefined look-back period.
The Relative Strength Indicator is plotted below the price chart as a line chart that ranges between 0 and An upper and lower band indicating overbought and oversold levels are also overlayed across the RSI chart.
Sometimes, a centerband at the 50 level is also visible on the RSI chart. When the RSI rises beyond the upperband, the asset relative strength indicator rsi and binary options considered overbought. If the RSI drops below the lowerband, then the asset is considered oversold.
Traditionally, according to Wilder, the oversold level is set at 30 while the overbought level is set at However, short term traders might want to set a tighter range of to reduce fake outs.
Increasing the look-back period will decrease the likelihood of hitting the overbought or oversold levels. The MACD indicator gives the short to medium term trend of the price action The bollinger bands are adaptive trading bands that reflect changes in volatility and provide a better view of the true extent of the price action The Parabolic SAR indicator or PSAR is designed to calculate the point in time when there emerges a better than average probability of a trend switching directions The ADX, or Average Directional Index measures the strength of a trend and can be useful to determine whether an asset is currently in a trending market or a ranging market Stocks, futures and binary options trading discussed on this website can be considered High-Risk Trading Operations and their execution can be very risky and may result in significant losses or even in a total loss of all funds on your account.
You should not risk more than you afford to lose. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Information on this website is provided strictly relative strength indicator rsi and binary options informational and educational purposes only and is not intended as a trading recommendation service.
The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.