Relative Strength Index or RSI refers to the momentum an asset has during its rise or fall. The higher the RSI, the sharper the rise or fall in the price. The index is on a scale from 1 to 100, with higher numbers denoting higher momentum in the price.
How to Use Relative Strength Index in Trading?
Relative Strength Index is used to gauge the momentum of an asset during a trend, both bullish and bearish. Higher RSI often means that the stock price can be predicted to move in a certain direction. For example, a lower RSI number indicates indecisiveness in the market, whereas a high RSI number signals that the asset will continue the trend.
If RSI is going upwards and it crosses 60, it confirms a bullish or bearish momentum (depending on direction) and the prices are expected to rise. On the other hand, if RSI dips below 30, the trend is about to end, and a reversal could be on the cards.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
