RSI Interpretation

RSI Interpretation

When Wilder introduced the RSI,
he recommended using the 14-day RSI.
Since then, the 9-day and 25-day
RSIs also gained popularity.
Because you can vary the number
periods of time
in the RSI calculation, I suggest
to experiment
to find a time that works best for you.
(The fewer days used to calculate the RSI,
more volatile the indicator.)

RSI is the price per oscillator-
which ranges between 0 and 100.
A popular method of analyzing the RSI
to look for divergence
where security is making a new high
But the RSI fails to surpass its previous high.
This divergence is an indication of an impending reversal.
When the RSI then turns down and
falls below its most recent trough, it is said
have completed a "failure swing."
The failure swing is considered a confirmation
of an impending reversal.

In the book of Mr. Wilder, he discusses five uses
RSI in analyzing commodity charts.
These methods can be applied to other security
species as well.