Buy low sell high is a good helper Relative Strength Index RSI Money Tips

Category: Money tips Release Date: 2006-06-29

RSI's analysis points:

(1) RSI value of 50, shows that buyers and sellers are evenly matched, for the balance; said the rally in more than 50; 50, said the following fall.

(2) RSI values fluctuate between 40-60 the probability of the largest, indicating that the market genuine "leather correction"; if it rose to 70 or 80 above, that has been overbought, continue to rise then enter a serious warning overbought zone, suggesting stock is very likely to reverse the decline in the short term; thereupon dropped to 30 or 20 below, that the phenomenon has been oversold, once again fell into the grave that had been oversold security zone, suggesting that stock prices may go up again.

(3) "Spring River, plumbing duck prophet", the stock market RSI "foresight." When the stock price index has yet to go up, RSI indicator has been the first l; when the stock price index does not fall, RSI indicator has been the first drop, especially in the stock price even more pronounced peak and valley regions. This is the RSI indicator than the stock price index or individual stock prices can be the future trend of the strength of the first show. The use of this indicator feature, you can make the following judgments:

a. When the stock market correction, when, RSI at the end of a high-end than the one expressed strong bull trend, in order to buy time; on the contrary, RSI at the end of a lower than the one at the end of that short strong potential for the time to sell.

b. When the stock was still RSI had compiled a complete consolidation, first break the trend line, suggesting that stock prices will soon break through finishing.

c. When the stock price high, while innovative, RSI is also high, indicating strong potential is still strong, may not rise; while if the RSI is not at the same time new high, then about to reverse.

d. When the stock price continue to record low at the same time, RSI also to new lows, said the market outlook is still weak, but also decreased; if the RSI is not the same time, innovation and the end of the stock is very likely to rebound.

e. In the graphic RSI overbought territory earlier than the K-line graph appears at the top or bottom of the graphics, such as M, or W at the end of the first to show reversal or rebound signals.

(4) RSI and a straight line graph map and K compared to more clearly emerged in Head and Shoulders, head and shoulders bottom, triangle, M, or W at the end of the first such shapes, can easily judge the break points, buy points and sell out the points, can also use the tangent line to draw support and resistance lines, and to judge the future trend.

Note: RSI indicators in response to changes in prices are now more sensitive, especially suitable for short-term operation, but the RSI indicator in the ultra-strong or super-weak are often unresponsive, that is, stock prices continued to rose or fell, while the RSI is only a slight increase or decrease in , is what we called passivation phenomenon, with the technical specifications should be judged.