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julius caesarSubstantially copying
investopedia article about RSI, translating it, and
asking to get merit for it.
Untranslated Copy (removed images):
Ano nga ba ang RSI?Ang Relative Strength Index (RSI) ay isang tagapagpahiwatig ng momentum na sumusukat sa magnitude ng kamakailang mga pagbabago sa presyo upang masuri ang overbought o oversold na mga kondisyon sa presyo ng isang stock o iba pang mga asset. Ang RSI ay ipinapakita bilang isang osileytor (isang linya ng graph na gumagalaw sa pagitan ng dalawang magpakalabis) at maaaring magkaroon ng pagbabasa mula sa 0 hanggang 100. Ang indicator ay orihinal na binuo ni J. Welles Wilder at ipinakilala sa kanyang seminal na aklat na 1978, "New Concepts in Technical Trading Systems. "
OVERBOUGHT AT OVERSOLD[img ]https://i.postimg.cc/HL8Nnrd6/FB-IMG-1553726432040.jpg[/img]
Ang tradisyunal na interpretasyon at paggamit ng RSI ay ang mga halaga ng 70 o sa itaas ay nagpapahiwatig na ang isang seguridad ay nagiging overbought o overvalued at maaaring ma-primed para sa isang trend reversal o corrective pullback sa presyo. Ang pagbabasa ng RSI na 30 o mas mababa ay nagpapahiwatig ng oversold o undervalued condition.
MGA TIPS PARA SA PAG-UNAWA SA OVERBOUGHT AT OVERSOLD[img ]https://i.postimg.cc/BQZwDYJL/FB-IMG-1553726493296.jpg[/img]
Ang pangunahing trend ng stock o asset ay isang mahalagang kasangkapan sa pagtiyak na ang mga pagbabasa ng tagapagpahiwatig ay nauunawaan nang maayos. Halimbawa, ang kilalang tekniko ng merkado na si Constance Brown, CMT, ay nagpo-promote ng ideya na ang isang oversold pagbabasa sa RSI sa isang uptrend ay malamang na mas mataas kaysa sa 30%, at ang overbought na pagbabasa sa RSI sa isang downtrend ay mas mababa kaysa sa 70% na antas.
Tulad ng makikita mo sa sumusunod na tsart, sa panahon ng isang downtrend, ang RSI ay magiging pinakamataas na malapit sa antas ng 50% sa halip na 70%, na maaaring magamit ng mga mamumuhunan upang mas madaling maipahiwatig ang mga bearish kondisyon. Maraming mamumuhunan ang maglalapat ng isang pahalang na trendline na nasa pagitan ng 30% o 70% na antas kapag ang isang malakas na trend ay nasa lugar upang mas mahusay na makilala ang mga magpakalabis. Pagbabago ng mga antas ng overbought o oversold kapag ang presyo ng isang stock o asset ay nasa pang-matagalang, pahalang na channel ay kadalasang hindi kailangan.
Mga Diskarte para sa Paggamit ng RSI IndicatorDivergences
Ang isang bullish divergence ay nangyayari kapag ang RSI ay lumilikha ng isang oversold reading na sinusundan ng isang mas mataas na mababa na tumutugma sa naaayon sa mas mababang mga hilig sa presyo. Ipinapahiwatig nito ang pagtaas ng bullish momentum, at ang break sa itaas oversold teritoryo ay maaaring magamit upang mag-trigger ng isang bagong mahabang posisyon.
SWING REJECTIONS BULLISH (PAG-ANGAT)[img ]https://i.postimg.cc/brhWKqX3/FB-IMG-1553726397963.jpg[/img]
Ang iba pang mga pamamaraan sa trading ang pagtukoy sa behavior ng RSI kapag muling umuusbong mula sa overbought o oversold territory. Ang signal na ito ay tinatawag na isang bullish "swing rejection" at mayroong apat na bahagi:
1- Ang RSI ay lumagpas sa overbought territory nito.
2- Ang RSI ay tumatawid pabalik sa 30%.
3- RSI bumubuo ng isa pang dip nang hindi tumatawid pabalik sa oversold teritoryo.
4- Pagkatapos ay nilalagpasan nito ang kamakailang kataasan.
Tulad ng makikita mo sa mga susunod na tsart, ang RSI indicator ay oversold, nabasag sa pamamagitan ng 30% at nabuo ang mababang pagtanggi na nag-trigger ng signal kapag ito ay tumalon mas mataas. Ang paggamit ng RSI sa ganitong paraan ay katulad ng pagguhit ng mga trendline sa isang tsart ng presyo.
SWING REJECTIONS BEARISH (PAG-BABA)[img ]https://i.postimg.cc/L89RJBbN/FB-IMG-1553726307345.jpg[/img]
Tulad ng mga divergences, mayroong isang bearish na bersyong signal swing rejection na mukhang isang mirror na imahe ng bullish na bersyon. Mayroong apat na bahagi ang isang pagtanggi sa bearish swing.
1- Ang RSI ay tumaas sa overbought territory.
2- Ang RSI ay tumatawid pabalik sa 70%.
3- Ang RSI tumataas na hindi tumatawid pabalik sa overbought territory.
4- Pagkatapos ay nilagpasan nito ang kamakailang kababaan.
PANOORIN ANG YOUTUBE RSI TUTORIAL
https://youtu.be/rgVdgR1y1Dg Translated copy (via Chrome):
What is RSI?
The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to assess the overbought or oversold conditions in a stock or other assets. The RSI is shown as an oscillator (a line graph that moves between two extremes) and may have readings from 0 to 100. The indicator was originally developed by J. Welles Wilder and introduced in his seminal book 1978, "New Concepts in Technical Trading Systems."
OVERBOUGHT AND OVERSOLD
The traditional interpretation and use of RSI is that values of 70 or above indicate that a security becomes overbought or overvalued and may be primed for a reversal trend or corrective pullback in price. RSI reading of 30 or less indicates an oversold or undervalued condition.
TIPS FOR OVERBOUGHT AND OVERSOLD INFORMATION
The main trend of stock or asset is an important tool in ensuring that indicator readings are understood properly. For example, the famous market technician Constance Brown, CMT, promotes the idea that an oversold RSI reading at an uptrend is likely to be higher than 30%, and overbought reading on RSI in a downtrend is less than 70% level.
As you can see in the following chart, during a downtrend, RSI will be the highest close to the 50% level instead of 70%, which investors can use to more easily imply bearish conditions. Many investors will apply a horizontal trendline of between 30% or 70% levels when a strong trend is in place to better identify extremes. Changing overbought or oversold levels when the price of a stock or asset is in the long-term, horizontal channel is often unnecessary.
Techniques for Using RSI Indicator
Divergences
A bullish divergence occurs when the RSI creates an oversold reading followed by a higher low match corresponding to the lower price tendencies. This implies increasing bullish momentum, and the break above oversold territories can be used to trigger a new long position.
SWING REJECTIONS BULLISH
Other trading procedures define the RSI behavior when re-emerging from overbought or oversold territory. This signal is called a bullish "swing rejection" and there are four parts:
1- The RSI exceeds its overbought territory.
2- The RSI is crossing back to 30%.
3- RSI forms another dip without crossing back into oversold territory.
4- Then it surpasses its recent superiority.
As you can see in the next chart, the RSI indicator is oversold, broken by 30% and low rejection triggered signal when it jumps higher. The use of RSI in this way is similar to drawing the trendline on a price chart.
SWING REJECTIONS BEARISH
Like divergences, there is a bearish signal swing rejection version that looks like a mirror image of the bullish version. There is a decline in the bearish swing.
1- RSI has risen to the overbought territory.
2- The RSI is crossing back to 70%.
3- The RSI rises not crossing back to the overbought territory.
4- After it has exceeded its recent lowliness.
LEARN THE YOUTUBE RSI TUTORIAL
Original:
What Is The Relative Strength Index - RSI?
The relative strength index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. The indicator was originally developed by J. Welles Wilder Jr. and introduced in his seminal 1978 book, New Concepts in Technical Trading Systems.
Traditional interpretation and usage of the RSI is that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.
Key Takeaways
The RSI is a popular momentum oscillator developed in 1978.
The RSI compares bullish and bearish price momentum plotted against the graph of an asset's price.
Signals are considered overbought when the indicator is above 70% and oversold when the indicator is below 30%.
The Formula For RSI Is
The relative strength index (RSI) is computed with a two-part calculation that starts with the following formula:
The average gain or loss used in the calculation is the average percentage gain or losses during a look-back period. The formula uses positive values for the average losses.
The standard is to use 14 periods to calculate the initial RSI value. For example, imagine the market closed higher seven out of the past 14 days with an average gain of 1%. The remaining seven days all closed lower with an average loss of -0.8%. The calculation for the first part of the RSI would look like the following expanded calculation:
Once there are 14 periods of data available, the second part of the RSI formula can be calculated. The second step of the calculation smooths the results.
How To Calculate RSI
Relative Strength Index (RSI)
Using the formulas above, RSI can be calculated, where the RSI line can then be plotted alongside an asset's price chart.
The RSI will rise as the number and size of positive closes increase, and it will fall as the number and size of losses increase. The second part of the calculation smooths the result, so the RSI will only near 100 or 0 in a strongly trending market.
TradingView.
As you can see in the above chart, the RSI indicator can remain in "overbought" territory for extended periods while a stock is in an uptrend. The indicator can stay in "oversold" territory for a long time while a stock is in a downtrend. This can be confusing for new analysts, but learning to use the indicator within the context of the prevailing trend will clarify these issues.
What Does RSI Tell You?
The primary trend of the stock or asset is an important tool in making sure the indicator's readings are properly understood. For example, well-known market technician Constance Brown, CMT, has promoted the idea that an oversold reading on the RSI in an uptrend is likely much higher than 30%, and an overbought reading on the RSI during a downtrend is much lower than the 70% level.
As you can see in the following chart, during a downtrend, the RSI would peak near the 50% level rather than 70%, which could be used by investors to more reliably signal bearish conditions. Many investors will apply a horizontal trendline that is between 30% or 70% levels when a strong trend is in place to better identify extremes. Modifying overbought or oversold levels when the price of a stock or asset is in a long-term, horizontal channel is usually unnecessary.
TradingView.
A related concept to using overbought or oversold levels appropriate to the trend is to focus on trading signals and techniques that conform to the trend. In other words, using bullish signals when the price is in a bullish trend and bearish signals when a stock is in a bearish trend will help to avoid the many false alarms the RSI can generate.
Example Of How To Use The RSI Indicator
Divergences
A bullish divergence occurs when the RSI creates an oversold reading followed by a higher low that matches correspondingly lower lows in the price. This indicates rising bullish momentum, and a break above oversold territory could be used to trigger a new long position.
A bearish divergence occurs when the RSI creates an overbought reading followed by a lower high that matches corresponding higher highs on the price.
As you can see in the following chart, a bullish divergence was identified when the RSI formed higher lows as the price formed lower lows. This was a valid signal, but divergences can be rare when a stock is in a stable long-term trend. Using flexible oversold or overbought readings will help identify more valid signals than would otherwise be apparent.
TradingView.
Swing Rejections
Another trading technique examines the RSI's behavior when it is re-emerging from overbought or oversold territory. This signal is called a bullish "swing rejection" and has four parts:
RSI falls into oversold territory.
RSI crosses back above 30%.
RSI forms another dip without crossing back into oversold territory.
RSI then breaks its most recent high.
As you can see in the following chart, the RSI indicator was oversold, broke up through 30% and formed the rejection low that triggered the signal when it bounced higher. Using the RSI in this way is very similar to drawing trendlines on a price chart.
TradingView.
Like divergences, there is a bearish version of the swing rejection signal that looks like a mirror image of the bullish version. A bearish swing rejection also has four parts:
RSI rises into overbought territory.
RSI crosses back below 70%.
RSI forms another high without crossing back into overbought territory.
RSI then breaks its most recent low.
The following chart illustrates the bearish swing rejection signal. As with most trading techniques, this signal will be most reliable when it conforms to the prevailing long-term trend. Bearish signals in negative trends are less likely to generate a false alarm.
TradingView.
The Difference Between RSI and MACD
The Moving Average Convergence Divergence (MACD) is another trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD, called the "signal line," is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. Traders may buy the security when the MACD crosses above its signal line and sell, or short, the security when the MACD crosses below the signal line.
The RSI aims to indicate whether a market is considered to be overbought or oversold in relation to recent price levels. The RSI calculates average price gains and losses over a given period of time; the default time period is 14 periods with values bounded from 0 to 100.
The MACD measures the relationship between two EMAs, while the RSI measures price change in relation to recent price highs and lows. These two indicators are often used together to provide analysts a more complete technical picture of a market.
These indicators both measure momentum in a market, but because they measure different factors, they sometimes give contrary indications. For example, the RSI may show a reading above 70 for a sustained period of time, indicating a market is overextended to the buy side in relation to recent prices, while the MACD indicates the market is still increasing in buying momentum. Either indicator may signal an upcoming trend change by showing divergence from price (price continues higher while the indicator turns lower, or vice versa).
Limitations Of The RSI
The RSI compares bullish and bearish price momentum and displays the results in an oscillator that can be placed alongside a price chart. Like most technical indicators, its signals are most reliable when they conform to the long-term trend. True reversal signals are rare and can be difficult to separate from false alarms. A false positive, for example, would be a bullish crossover followed by a sudden decline in a stock. A false negative would be a situation where there is bearish crossover, yet the stock accelerated suddenly upwards.
Since the indicator displays momentum, as long as ab asset's price momentum remains strong (either up or down) the indicator can stay in overbought or oversold territory for long periods of time. Therefore, the RSI is most trustworthy in an oscillating market when the price is alternating between bullish and bearish periods.
edit: He similarly plagiarized the
macd article on investopedia in his translated
thread about the same. The articles have different authors.
