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The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.
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Williams used a 10 trading day period and considered values below −80 as oversold and above −20 as overbought. But they were not to be traded directly, instead his rule to buy an oversold was %R reaches −100%. Five trading days pass since −100% was last reached %R rises above −95% or −85%. or conversely to sell an overbought condition
It is also a technical indicator used in the technical analysis of foreign exchange market (Forex). It is intended to chart the current and historical strength or weakness of a currency based on the closing prices of a recent trading period. It is based on the relative strength index and mathematical decorrelation of 28 cross
Systematic trading is most often employed after testing an investment strategy on historic data. This is known as backtesting (or hindcasting ). Backtesting is most often performed for technical indicators combined with volatility but can be applied to most investment strategies (e.g. fundamental analysis).
Selling strategy. Opportunity. There are several different trading strategies that can be employed to take advantage of this formation. Of course, first and second peaks are perfect point to place sell orders. After the double top has been confirmed and if prices are moving up again with low volume, it is an opportune point to sell.
An oscillator in technical analysis of financial markets is an indicator that informs if the price of a financial instrument is very high or very low, indicating whether it is overbought or oversold. This helps traders make decisions about when to trade (buy or sell) that instrument.
The Vortex Indicator is available on most charting software. [4] Some of these companies have suggested additional trading strategies to use in conjunction with the Vortex Indicator, including the implementation of a trailing stop [5] and making use of supporting indicators in order to reduce the number of false signals. [6]