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Technicals

relative strength index

Welcome to our lesson on Relative Strength Index or RSI. This indicator was developed by Welles Wilder Jr. and is commonly used in the world of finance to identify price tops and bottoms. The RSI chart is scaled from 0-100 and typically uses key levels such as "30" and "70". It can also help us detect movements that may not be as obvious on a bar chart and warn of potential reversals through failure swings. Additionally, RSI can assist in identifying support and resistance levels and divergence between the indicator and price, serving as a useful reversal indicator. However, it's important to note that the RSI requires some lead-up time to be used successfully. Let's take a look at the formula for calculating RSI.

The RSI formula is rsi = 100 - (100 / 1 - rs), where rs is the average of x day's up closes divided by the average of x day's down closes.

The toggle you see before you is a valuable tool for analyzing stock performance – the stochastics indicator. This indicator, calculated over a 10-day period, provides insig...

In the world of finance, there exists a phenomenon known as a consolidation pattern. This pattern often occurs during a sharp increase or decrease in the market, taking the ...

50% Principle (one-half retracement)

As we observe the movements in price, it is important to understand the principle of retracement. This principle states that after a significant move in either direction, a ...

The Gann Square is a powerful tool in finance for determining support and resistance levels based on a stock's extreme price points. It works by extrapolating probable pric...

Momentum divergence

Momentum divergence is a phenomenon in the world of finance that occurs when the price and volume of a security diverge, meaning they move in opposite directions. This can h...

A trading range can be identified by a sequence of lower highs and higher lows. This pattern is known as a triangle, and it is characterized by a narrowing of the range. Eve...

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