RSI Period setting in technical analysis indicators:

RSI (Relative Strength Index) technical analysis in forex trading:

RSI was developed by J. Welles Wilder

RSI is one of the most commonly used momentum indicators (oscillator) for technical analysis in forex trading. The signals provided by the RSI are as follows:

1) When a currency pair is overbought:
suggests that the way to short sell.

2) When a currency pair is oversold:
indicates that its time to buy.

Please not that the RSI Period setting (relative strength index) works well when the currency pair prices ranging but gives false signals when the market's trend, or bearish (uptrend) or bearish (downtrend). You can use the ADX for market analysis, if it is in range or a trend.

RSI Period setting readings range from 0 to 100.

* When the RSI approaches 30 or goes below 30, the signal is that the currency pair is oversold and it may be time to buy a pair.
* When approaching or RSI crosses below 70 and go, the signal is that the market is overbought and it may be time to short sell the currency pair ..

Technical Analysis - Relative Strength Index - RSI Period setting:-Forex Trading Technical Analysis RSI 1


In the above table for Forex EUR / USD at points A, B, C, D and E is the RSI or close to 70 or above 70th Points B, C, D, E (at the bottom of the table) when the market is in range (side). The sequence implies that there is no trend up or down.

Yellow vertical lines connecting these RSI levels of prices of a candle-stick pattern Forex EUR / USD above.

If you see the corresponding points A, B, C, D, E for a candle-stick pattern (top) you will see that prices go down after touching these points. So if we would sell the currency pair short when prices were at A, B, C, D or E, it will generate profit, as prices come down repeatedly.

Similarly, the points X, Y (bottom), where the RSI was either near the level of 30 or below level went 30th

Red vertical lines connecting these RSI levels of prices of a candle-stick chart above.

If you notice the corresponding points X and Y the candle-stick pattern (top) you will see that prices subsequently recovered or have gone after touching these points (points X & Y). So if you buy when prices were on the X or Y, we will end up with profit as the prices went up after that.

ADX Check to see if the market moves sideways (ADX below 25) and using the RSI:

Technical Analysis - Relative Strength Index - RSI Period setting:-Forex Trading Technical Analysis RSI Period setting 2

When and how to use RSI Period setting in forex trading:

RSI is good when the market in the range (neither bullish nor bearish but move sideways in a range), but not when its trending market (uptrend or bullish or downtrend or bearish)

Cautious approach:

* Buy when RSI Period setting currency pair goes up to 30 mark, take a small dip again and again over 30 under 30 (as a small correction) and goes up slightly more than the 30th Take profits when prices go up.
* Sell the currency pair when the RSI goes below 70 mark. Correction takes to get up and then comes back below 70 again.

Buying and selling the currency pair's first crossover / signal is never recommended, and we should wait for correction and verification.

It is possible that when the RSI rises, it does not move or reach level 70, but starts going down from the level below 70 than to say such after it reaches the level of the 65th

Similarly it is possible that when the RSI Period setting is going down, it does not move or reach level 30, but starting to go up by over 30 levels of let's say for example after it reaches the level of the 35th

In such cases we might miss the chance to enter the market and if you're ready to take more risks, you can enter the market just below 70 (short-selling) when the RSI is going up or just above the RSI 30 ( buy) when the RSI is going down.

RSI Period setting in technical analysis indicators:
In forex trading the very possibility of setting the RSI is 14 periods, which means that if we calculate the RSI on daily chart Forex would measure 14 days, and in case the hour forex chart, we would measure 14 hours. The default setting of 14 is common to several popular indicators, such as Relative Strength Index (RSI) and Average True Range (ATR).

We explained RSI (Relative Strength Index) in the context of forex trading, but it stands up well to trading on a stock or commodities trading.