RSI stands for relative strength index and it helps measure the direction and momentum of a specific stock.
Generally, RSI looks at gains and losses over 14 periods, although some traders could rely on different time intervals.
An RSI indicator increases when a stock increases in value and decreases when the opposite is true.
The indicator is measured on a scale of 0 to 100. When it drops below 30, the stock is oversold and has likely been trending downward for some time. Conversely, RSI of 70 or above indicates a stock on an uptrend that is now overbought.
Said that, The RSI divergence helps stock traders spot and take advantage of investment divergence.
When used correctly, RSI can be one of the best available effective trade and confirmation indicators.
With RSI divergence, the relative strength index of a specific stock shows lower highs when the price uptrend hits higher highs, and viceversa.
Divergence indicates that the current price trend is flagging, which provides insight into whether it’s time to make a move to buy or sell that particular stock. When an indicator disagrees with the price, this lack of synchronicity indicates a likely change with the chart.
On this chart we can see the RSI divergence on Apple (AAPL). What do you think about it?
Generally, RSI looks at gains and losses over 14 periods, although some traders could rely on different time intervals.
An RSI indicator increases when a stock increases in value and decreases when the opposite is true.
The indicator is measured on a scale of 0 to 100. When it drops below 30, the stock is oversold and has likely been trending downward for some time. Conversely, RSI of 70 or above indicates a stock on an uptrend that is now overbought.
Said that, The RSI divergence helps stock traders spot and take advantage of investment divergence.
When used correctly, RSI can be one of the best available effective trade and confirmation indicators.
With RSI divergence, the relative strength index of a specific stock shows lower highs when the price uptrend hits higher highs, and viceversa.
Divergence indicates that the current price trend is flagging, which provides insight into whether it’s time to make a move to buy or sell that particular stock. When an indicator disagrees with the price, this lack of synchronicity indicates a likely change with the chart.
On this chart we can see the RSI divergence on Apple (AAPL). What do you think about it?