What is the RSI indicator?

December 23, 2022 | monetaeditor

The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. It is a popular technical analysis tool that traders use to identify potential buying and selling opportunities.

How is it used by traders?

Traders typically use the RSI to identify potential buying and selling opportunities based on overbought and oversold conditions. For example, if the RSI is above 70, the asset may be considered overbought and may be due for a pullback or correction. On the other hand, if the RSI is below 30, the asset may be considered oversold and may be due for a bounce or rally. Traders can also use the RSI to confirm the strength of a trend or to identify potential trend reversals. For example, a rising RSI may indicate that a uptrend is gaining strength, while a falling RSI may suggest that the trend is losing momentum.

How can I add RSI to a chart in MT4 or MT5?

To add the RSI to a chart in MetaTrader 4 (MT4) or MetaTrader 5 (MT5), follow these steps:

Open the chart for the currency pair, stock, or other instrument that you want to analyze.

Click on the ”Insert” menu at the top of the chart and select ”Indicators” from the drop-down list.

In the ”Indicators” window, scroll down until you find the ”Relative Strength Index” and then double-click on it to add it to the chart.

The RSI will appear on the chart as a separate window below the main price chart.

You can customize the appearance of the RSI by right-clicking on it and selecting ”Properties” from the context menu. This will open the ”Relative Strength Index” properties window, where you can change the color, line style, and other settings for the indicator.

Once you have customized the RSI to your liking, click ”OK” to apply the changes and close the properties window. The updated RSI will be displayed on the chart.

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Moneta Markets is a trading name of Moneta Markets (Pty) Ltd, an authorised Financial Service Provider (“FSP”) registered and regulated by the Financial Sector Conduct Authority (“FSCA”) of South Africa under license number 47490 and located at 1 Hood Avenue, Rosebank, Johannesburg, Gauteng 2196, South Africa. Company Registration Number: 2016 / 063801 / 07. Contact Phone Number: +27 (10) 1429139. Operational Office: 31 First Avenue East, Parktown North, Gauteng, Johannesburg, 2193, South Africa.

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Mmonexia Ltd, facilitates payment services to the licensed and regulated entities within the Moneta Markets Organizational structure.

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