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The level of the RSI is a measure of the stock's recent trading strength. The slope of the RSI is directly proportional to the velocity of a change in the trend. The distance traveled by the RSI is proportional to the magnitude of the move. Wilder believed that tops and bottoms are indicated when RSI goes above 70 or drops below 30.
The number helps gauge whether the price of a stock is on the rise or on the decline.
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.
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
While value investors look for stocks that have become priced too low or high based on fundamental metrics such as earnings, revenue and debt, technical traders base their buys and sells off of ...
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The true strength index (TSI) is a technical indicator used in the analysis of financial markets that attempts to show both trend direction and overbought/oversold conditions. It was first published by William Blau in 1991.
The REI is most typically used on an 8 day timeframe. It changes on a scale from −100 to +100, with the overbought and oversold levels marked at +60 and −60, respectively. The range expansion index was developed by Thomas DeMark and published in his 1994 book, The New Science of Technical Analysis. [1]