Relative Strength Index: Relative Strength Index is an indicator that integrates all technical analysis software. Investors use it for free. This index is applicable to buy / sell and divergent features. This is one of the tools to assess the power of generals. In fact, this only suffers quite a lot of noise.
So today I will show you how to use this indicator, as well as pros and cons of this indicator.

Usage and function of RSI

System RSI
RSI is only a single line with a range of 0-100, with a custom cycle and default of 14. On RSI there will be 2 horizontal lines at 70 and 30 often using this parameter. Investors can customize all the above parameters.

Overbought and over sold

On RSI it is often used to consider the overbought / oversold condition of the market at the time and time frame under consideration.
Overbought and over sold
With this information and signal on RSI, there are 2 important levels, 30/70, which are 2 levels of overbought / oversold.
- Over-selling: When RSI is below 30 or lower. In this area, investors can buy.
- Overbought: When RSI is above 70 or higher. Here, the purchasing power has been exceeded, so investors can sell.

Divergence signal on RSI

You can view more divergent divergent indexes Divergence with the MACD

The cycle of price reversal increases - Increasing divergence: When there is this signal, it is likely that the market will reverse the price increase in a long time, formed as follows:
Divergent signal on RSI
The characteristics of identification and necessary conditions for this signal are as follows:
- Before that was a discount.
- On the price line, there are 2 bottoms, then (bottom 2) lower than the previous bottom (bottom 1). At the same time, RSI also created 2 troughs.
- On RSI, there are 2 bottoms, the bottom (bottom 2) is higher than the previous bottom (bottom 1).
- There are no other bottoms between these two bottoms.
==> Trading: After having the above signal and completing the bottom 2, investors will enter the trading order at the second bottom (the bottom).

The price reversal cycle - Divergence decreases: When there is this signal, it is likely that the market will reverse price reduction in a long time, formed as follows:
Divergence decreases
The characteristics of identification and necessary conditions for this signal are as follows:
- Before that was a discount.
- On the price line creating 2 peaks, the next peak (peak 2) is higher than the previous peak (peak 1).
- On the RSI line, two peaks are created, but the next peak (peak 2) is lower than the previous peak (peak 1)
- There is no other peak between this peak.
==> Trading: After having the above signal and completing the second peak, investors will enter the trading order at the second peak (the next peak).

Advantages and disadvantages of this index

With RSI index is quite sensitive to the market, changes very quickly when the market changes. So this is a general indicator. The level of error and noise is quite large.

- Advantages:
+ Suitable for transactions in large time frames from D1 upwards. This index should not be traded in a small time frame.
+ It is applicable for trading almost all currency pairs, foreign currencies as well as securities.
+ Surfing, trading in the short term.
+ With RSI divergence, the market is likely to create a peak / bottom.
+ ..... Investor verifies more ...!

- Defect:
+ Being disturbed, sensitive, fluctuating.
+ Divergences rarely occur.
+ Do not trade on small time frames.
+ Do not identify the trend.
+ .... in the process of applying investors to self-verify more ....!

Here only guide the main of this index so that investors can bring the best profit possible. In addition, investors can read other methods, and learn more about other indexes on this website.