Category: Money tips Release Date: 2006-04-19
Quotes for the week of adjustment, there is a very accurate indicator of the advance signal, which is RSI indicator.
Relative Strength Index theory that in a normal stock market, only the strength of both sides to achieve a balanced long-short, stock prices can be stable.
RSI indicator is a period of time by comparing the rate of increase and the fall to analyze the market orders with the intent and capability to analyze future market trend.
The formula is:
RSI = 100-100 / (1 + RS)
RS = N days, the sum of the closing price rises รท N days, the sum of the closing price declines
Formula RS is also known as the relative strength of the value, RSI formula changes in the strength of the limited range between 0-100.
Relative Strength Index indicators need to set up three lines, RSI indicator parameters are: N1, N2, N3 statistics the number of days, generally set to 6,12,24. Stronger sense of the value of the larger trend of N, but there are responses tend to lag, known as the slow line; N value is more sensitive to smaller changes in right, but is easy to produce erratic feeling, called the fast line.
RSI reflects the price changes in four factors: the rise in the number of days decreased the number of days, the rising rate, down range. It shares the four elements are to be considered, so in respect of its market forecast accuracy is more credible.
According to normal distribution theory, random variable values near the center of the opportunities the region near the largest value farther away from the center, the less chance there. In the stock market's long-term development process, the vast majority of the time the changes in the relative strength index range between 30 and 70 Among them, the opportunity between 40 and 60 up to more than 80 or less than 20 fewer opportunities . Opportunities arising from the minimum is above 90 and below 10.
Practical application:
Our description of the stock market this week, the practical application of RSI indicator, the RSI indicator, the top is an important departure from the application of the principle. When the RSI divergence indicators for the role, the general-turn signal, representing the general trend reversal. Quotes a wave if Bobby is low, the opposite Bobby RSI is a wave is high, the stock price reversal up is easy. Bobby, if a wave of high-Quotes, the opposite Bobby RSI is a wave of low, the stock is easy to reverse the decline.
Recently, the tape Despite the strong rise, but the RSI indicator to show a clear departure from the top, last Thursday's close index is 1183.58,6 day RSI indicator is 93.03; and a close this week index is 1187.01, RSI indicator but fell to 80.58; Week 3 index rose to 1192 points, RSI has continued to decline to 76.32. In the index point and a wave of high-Bobby, while Bobby indicators are a wave of low, such a departure from the strongly foreshadowed the broader market about the short-term peak. Sure enough, there peaked in the broader market trend Thursday.
Divergence when the RSI and stock price, investors should choose the right trading time. Combination of fast and slow two RSI line to determine the timing of the sale: the six days and 12 days RSI used in combination, when the RSI line 6 down to below 12, RSI, shall sell signal. Especially when the RSI is over 70 issued by the sell signal should pay more attention.
