Currency Trading Tips & RSI Interpretation and Analysis
As Best Forex Trading Tips has progressed, we have gotten a bit more into the technical side of trading as well as technical analysis. It should be no surprise that yes, TA is something vital to trading forex. But what Technical Analysis works the best? What is the easiest to learn? What does it all mean?!
Technical analysis is dissecting a financial chart to look for any indicators that might show either bullish or bearish signs. One of the most popular and widely used is called the RSI. It is easy to learn, easy to explain, and it can work in a variety of different investments. Aside from Forex, you can use this in your stock trading account.
I would first like to warn all of our readers that I am going to give you a very, very watered-down explanation. The RSI could have a whole book written on it, and it would take too long to explain every little detail in this article.
RSI Stands For
The RSI stands for the Relative Strength Index. It is to help chart current or past strengths and weaknesses of that specific investment about the closing price in a specific period. It is an Oscillator Index and can be directly added to your trading charts with most trading software.
RSI fluctuations
The RSI fluctuates, and it will tell the trader if that security is oversold or overbought according to its past trading history. Please check the picture above. It shows a 14-day RSI. If you look at the right side of the chart, you can see a prime example of the RSI showing a very strong overbought sign. The RSI crossed the “overbought” line, and once it did that, the security dropped in price. With a lot of technical analysis, it is also very important to remember that many people are all watching the same indicators. Because of this, a lot of these trends are self-fulfilling.
