What is a relative force?
The type of technical trading indicator called an oscillator, investors in the stock market market use the index to determine the momentum and demand and demand. The usefulness/popularity of relative force is based on the assumption that it will be the peak or the day before the price of a stock or index. The relative force index (RSI) measures the size or size of recent profits on the size of its recent losses. The resulting RSI values are scaled and carried from 0 to 100, with 30 usually serving as a lower threshold, which means that it is sold and 70 upper thresholds, which is converted in stocks. The concept of relative strength and RSI was invented by Welles Wilder, who described them in new concepts in technical trading systems , which he published independently in 1978. For every day during the RSI calculation period. The ratio of exponential gliding diameter "up" days - ie numerrator - and "down" days - denominator - in this period indicates RSI. RSI is set to 100 if they are in the period of zero “DOlů ”.
Volatility of RSI values increases with a shorter period of time. For example, the 7 -day RSI will be more volatile than the 21 -day RSI. Stock prices over the last 7 and 14 days are typical periods used for RSI calculation.
Convergeration and divergence between RSI shares and its random price change are important when using RSI to determine whether to buy or sell shares or index. Convergence is a situation where the price of shares and its RSI move in tandem. This is considered to be a bull business signal that indicates that the demand for stocks is growing; In other words, this suggests that investors accumulate stocks.
, on the other hand, is a situation where a growing or permanently high RSI coincides with the price price price. This is considered a bear signal, indicating that prices are likely to move down. It usually takes place after shares appear included, divergence as a hint of "distribution", ie.Those who held stocks on the way up now reserve profits and leave the sale of shares to new buyers.