Among traders all around the globe, the Relative Strength Index (often known as RSI) is the most widely used technical indicator. Wells Wilder was the one who came up with the idea in the 1970s. Mr. Wilder recommended that the default value for the indicator be 14 days in his book New Concepts in Technical Trading Systems, which was published in 1978. (half-moon cycle).
The Relative Strength Index (RSI) is a popular technical indicator that is used to identify overbought and oversold levels. Other terminology, such as Divergence, Reversal, and Failure Swing, are related with the use of RSI.
On the other hand, the notion of range shifting was first conceived by Andrew Cardwell, also known as Dr. RSI. In addition to this, he discovered that the RSI indicator can be used in both trending and non-trending markets equally well.
Therefore, in today’s post, we will talk about a trading technique that is easy to understand but very successful, and it uses the RSI range shift concept:
What exactly is meant by the phrase “relative strength index”?
The relative strength index, often known as RSI, is an indicator that is used in technical analysis. Its purpose is to assess whether a stock or other asset has been overbought or oversold by analysing the magnitude of recent price swings.
The Relative Strength Index (RSI) is shown as an oscillator, which is a line graph that moves between two extremes, and it has a range that goes from 0 to 100. J. Welles Wilder Jr. was the one who developed the indicator, and he included it in his seminal work “New Concepts in Technical Trading Systems,” which was released in 1978.
Values of 70 or above on the RSI, according to the conventional interpretation and use of the indicator, are indicative of an investment that is becoming overbought or overpriced and may be getting close to being ready for a trend reversal or corrective retreat in price. On the other hand, a reading of 30 or below for the RSI indicates that the market is either oversold or undervalued.
What exactly is meant by the term “RSI Range Shift”?
RSI Range Shift is a phenomena that takes place when the RSI indicator’shifts’ from one predetermined range to another in reaction to changes in the price movement of an underlying asset. This phenomenon is named after the acronym RSI, which stands for Relative Strength Index. The Relative Strength Index (RSI) may be broken down into five distinct ranges.
Extremely Bullish: Between 60 and 80
40–80 points in favour of the bulls
Range of Bearish 20 to 60
Extremely Bearish Forecast: 20–40
Sideways Range-40-60
Examples of Trading Activity
The Most Extremely Bullish Range
In this scenario, the Relative Strength Index (RSI) resists falling below 60 and looks for support close to 60. During this very bullish phase, the RSI has a tendency to oscillate between the values of 60 and 80. Take the following illustration of Reliance into consideration.
An Upward Trending Scale
When a stock price is going up, the Relative Strength Index (RSI) will not drop below 40. Instead, it begins looking for assistance around around level 40. For instance, take a look at the chart of Lupin below; the relative strength index (RSI) refused to drop below 40 and instead oscillated between 40 and 80.
A Scale of Decline
Instead of reaching the level of overbought 70, the RSI often runs into some kind of resistance around the level of 60 when a stock is in a downward trend. The following image from Just Dial does a good job of illustrating the idea. Take a look at how the relative strength index encountered resistance at the 60 level.
Super Bearish Range
When a stock is experiencing a major downward trend, the RSI has a difficult time moving over the 40 mark. It encounters resistance close to 40, suggesting that the stock is already overbought even at 40 on the RSI. Take a look at the chart below to see how the RSI failed to break through the 40 level during the extreme negative period that Bank of Baroda was experiencing.
Sideways Range
When there is no discernible trend in the underlying asset, the RSI has a propensity to oscillate between the values of 40 and 60. It typically discovers support close to 40, but encounters opposition close to 60. In the instance of Pidilite, the RSI spent the majority of the time throughout the sideways phase fluctuating between 40 and 60.
The RSI range shift idea will be discussed in detail here. You may see other webinars about RSI by clicking the following links:
Webinars pertaining to RSI 1 How to Make Short-Term Trades Using the Relative Strength Index
A trader who is somewhat successful is able to accurately identify trends, momentum, and important pivot levels in order to initiate trades that are lucrative. But it goes without saying that he also has to be able to choose equities before he can consider the trend a friend.
You will be able to accomplish all of the aforementioned objectives with the assistance of our RSI webinar, as well as trade successfully and even learn how to choose stocks for the day, the short term, and the medium term.
The RSI’s strength zones and the signals that tell you when to trade in those zones
The focus of this webinar is on developing an appreciation for the dynamic link that exists between price and momentum. In this session, we will delve into the specifics of the Relative Strength Index (RSI) indicator and investigate the significance of momentum in the realm of trading.
How a Competent Professional Should Use RSI
RSI, which stands for relative strength index, is going to be the topic of discussion throughout this webinar. During this webinar, we will go more deeply into the RSI, as well as cover several trading methods that make use of it.
During this webinar, all fallacies will be debunked, and participants will get an understanding of the limits of this strong signal while using it as an overbought and oversold indication.
Ultimate Trading Signals Employing the Relative Strength Index
This webinar will teach you how to use the RSI in its most basic version to identify companies or indices that are making solid trending movements. Using RSI can help traders develop a sense of confidence about their bets, maximise their winnings, and minimise their losses to a significant degree.
Identifying Mutlibaggers using RSI Range Rules
Within the realm of technical analysis, the Relative Strength Index (RSI) is often regarded as one of the most essential and flexible indicators. During this webinar, we will go more deeply into RSI and talk about several techniques for putting it to use.
You will learn how to combine the RSI range criteria with basic price patterns to identify stocks with a very high likelihood that have the potential to generate returns that are much above average. Mr. Andrew Cardwell was the one who first proposed the Range Rule, although traders often use it wrongly.
The proper application of the range rules and how to pluck out multi-baggers will be the primary topics covered in this webinar.
Bottomline
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