TRADING THEORY ----What Is The RSI Oscillator ?

15 Nov in Blog, Bonds, commodities, currencies, futures trading, Mike Seery

TRADING THEORY ----What Is The RSI Oscillator ? ---The RSI oscillator ranges from 0 to 100 and when a commodity is deemed to be at overbought levels when the RSI approaches the 70 level and beyond meaning if the oscillator has an overbought condition of 92 that is higher and even more of an overbought condition then the 70 level and could mean that its getting overvalued and is a good candidate for a short term pullback.

On the other hand if the RSI approaches 30 or below that is an indication that the commodity may be getting oversold and therefore likely to become undervalued.

The closer to zero the more oversold the commodity has become and the odds can increase for a kickback. If you are using this indicator you will be trading counter trend meaning that   you are always buying in a down market and selling in an up market or using the oscillator to determine when to take profits.

In my opinion this indicator should be used with other indicators when establishing a position or when exiting a trade.  

 

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