The relative strength index(RSI) is a platform based trading index. When measuring the speed of financial instruments, it takes into account both the trading volume and price dynamics. Whether it is over sales or over purchases, any market situation can be analyzed using the relative strength index. This is achieved by calculating the loss and gain momentum of financial instruments within a predetermined period of time(usually 14 days).
Over buying relative strength index level
The most commonly used relative strength index level of the trading platform is 70, which is used to decide actions based on the overbought index.
• If the relative strength index is interpreted as more than 70, traders are too interested to continue trading, so it may be necessary to consider selling financial instruments in the near future.
• If the relative strength index is interpreted as more than 70, it may be necessary to consider setting up a sales loss prevention book on the online trading platform in order to leave the warehouse or enter a short position.
Relative strength index level of excess sales
The most commonly used relative strength index level of the trading platform is 30, which is used to decide actions based on the interpretation of excess sales.
• If the reading of the relative performance index is below 30, you may underestimate the financial instruments, so you may need to consider recent purchases.
• If the reading of the relative strength index is below 30, it may be necessary to consider setting an automatic trading purchase order so that the trading platform can automatically enter the warehouse.
The relative strength index can be used together with other transaction indicators. In RSI, if the transaction indicators are used on another day, the traders will be provided with an additional explanation layer for the upcoming transaction settings. An example of this potential transaction setting is the RSI breaking through the 30 threshold and breaking through the Brin Belt where the price trend line of financial instruments is low.
