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RSI Indicator Formula and Metatrader 4 RSI indicators

By   /   September 17, 2013  /   No Comments

RSI ( Relative Strength Index ).

RSI indicator is a technical indicator classified under Oscillators¬† indicators used in financial markets analysis specially and forex market , and it’s measuring the velocity and magnitude of directional price movements .

indicator image :

rsi line

RSI indicator shows Strength or Weakness for the market or for the symbol if we talk about forex market based on the current and historical price .

Indicator Formula :

Relative Strength Index uses the closing price most typically used on a 14 candle period to calculate the indicator value according to the equation :

First , indicator caculates RS Value according to :
Let’s consider that Up symbol refers to positive close candle and Dn symbol refers to negative close candle :

if current candle close higher than previous candle close then :
Up = Current candle close – Previous candle close .
Dn=0 .

if current candle close lower than previous candle close then :
Dn=Previous candle close – Current candle close .
Up=0 .

RS value = exponential moving average for Up sum / exponential moving average for Dn sum

then the RSI line final calculation is

rsi equation 1

How To Use RSI Indicator ?

50 Level indicator :

RSI indicator measured on scale from 0 to 100 the more higher if the indicator value is above 50 level thats good signal for uptrend , if the value is below 50 level thats good signal for downtrend .

OverBought and OverSold Levels :

RSI indicator also indicates overbought levels which start from 70 level and higher and oversold levels starts from 30 level and lower , when the indicator value reach those levels it predicts for a good reversal signal .

see the image below :

RSI indicator

different RSI indicators for Metatrader 4 platform :

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