The Relative Strength Index (RSI) is a popular momentum indicator used in technical analysis to assess the overbought or oversold conditions of an asset's price.
The RSI is displayed as an oscillator, ranging between 0 and 100, with traditional interpretations.
Logic of the algorithm:
- RSI values of 70 or above: Indicate that the asset is becoming overbought or overvalued, suggesting that it may be reaching a point where a trend reversal or corrective pullback in price could occur.
RSI values of 30 or below: Indicate an oversold or undervalued condition, implying that the asset may be nearing a point where a potential rebound or trend reversal to the upside could happen.
- Pre-configured for an interval of 14 periods on the candle of 1h.
- For additional confirmation, traders can combine the RSI indicator with another indicator. This combination can help enhance the reliability of trading signals and provide more comprehensive insights into market conditions. Some commonly used indicators to complement RSI include Moving Averages, MACD (Moving Average Convergence Divergence), Stochastic Oscillator, and Bollinger Bands, among others.