This element lets financial analysts estimate the course of price motion as compared to the preceding time frames. RSI provides actual data on the pipeline atmosphere and shows the points, where the marketplace is rebought and resold.
You can test the RSI index using demo account first.
How It Works?
This Index is never applied on the expense diagram. Alternatively, this line is indicated on a specific graph.
Experts frame this tool as a single branch with a couple of levels set automatically.
The vertical axis for the RSI index ranges in the diapason from 1 to 100, so that a merchant could see the top and bottom limits of current asset cost in comparison with its previous rates.
The RSI value is calculated by a stipulated formula. On the diagram, this path can reach 0 or 100 only when there are intense descending or ascending trends, accordingly.
With the common rebought and resold levels vary over the range of 70 - 30, this index will easily show you the most evident pipeline direction:
- If the detector line is located above the gauge of seventy, it demonstrates that the current scene is overbought; so the trend may move downhill.
- When the path is somewhere below the threshold of thirty, one can make a conclusion that the pipeline is resold; so, there is a chance that the tendency will soon reverse upwards.
Experts note that the reference rate for the RSI detector is 50, in its central tendency. As soon as you notice that the marker path is ranging between thirty and seventy, you can deduce that the current scene is even or the direction is straight.
In such a situation, the possibility of trend reversal is miniscule in the nearest time. In the moments of heightened marketplace volatility, the rebought and resold rates are set at 80 and 20, concordantly.
How to Adjust and Implement the RSI Element?
With IQ Option, you can set up this technical element in two different ways:
- The first one is to tap the List of Indexes, take out the segment of Oscillators and pick out the one you need at the moment.
- Another variant is to click the tab ‘Insert’, go to the new page with the register of Markers, select the section of Oscillators, and, eventually, click on RSI.
The tooling setup window will be displayed to you as soon as you open the diagram. Here, you can configure and adjust the element’s specifications, such as the time frame. It is, by all means, the most influential of all the tool’s settings.
The time frame specifies the quantity of asset cost rates played into the calculation in the course of charting the major indicator’s path. The narrower this moment, the steeper the resulting chart will be. Automatically, this characteristic is allocated at the level of 14; it’s a definitive parameter in most instances. As soon as the settings are fixed, you can start merchandizing using this marker coupled with other technical instruments.