Can Form 8655 Indicators 2024

In this video, we're going to take a look at the RSI (Relative Strength Index) oscillator and how we can use it to generate trading signals. Hello, I'm David Jones. Welcome back to my series on technical analysis and charting. Last time, we introduced the concept of oscillators, which are typically shown at the bottom of the chart and provide overbought and oversold signals. Today, we will dive deeper into the RSI. The RSI has been around since the late 70s and is considered one of the more established oscillators. It is a relatively simple tool, but it can be used in a couple of ways to generate potential trading signals. Before we explore its practical application, let's first understand how the RSI is calculated. The formula for the RSI is 100 minus (100 divided by 1 minus RS). But what is RS? RS stands for Relative Strength, which is the average of X number of days' up moves divided by the average of X number of days' down moves. For example, if we are using a 10-day RSI, we look at the past 10 days and calculate the average points gained on up days divided by 10. Conversely, we calculate the average points lost on down days divided by 10. This gives us an average value between zero and one for RS. Once we have the RS, we use it in the RSI formula to obtain a value between zero and 100 percent. Most software automatically calculates and plots the RSI on the chart, so you don't need to remember the formula. Now let's talk about how the RSI works in the real world. We'll start with a clean chart of the GBP/USD pair, with daily candlesticks and zero spread. Adding the RSI to our chart is simple. We go to the indicators...