Read about RSI indicator .
Technical Analysis on RSI indicator
First Read : RSI Indicator Formula and Metatrader 4 RSI indicators .
one of my favorite analysis tools to assist me predict any symbol direction is to use RSI indicator .
Not just old RSI way .
the normal use for RSI indicator is to determine the velocity and show overbought and oversold levels and it’s a good way actually no one can deny , but my favorite way to use RSI indicator is using technical analysis on it .
how to using Technical Analysis on RSI indicator ?
1- RSI trend lines :
easy and giving great results to predict when trend direction changes .
you can see it’s a good and strong signal specially if the indicator closes above the trend and 50 RSI level in the same time .
2- bounce from RSI 50 Level .
it’s a very strong support and resistance level if RSI indicator touch 50 level then bounce back it’s a good signal to enter a trade .
if symbol in downtrend direction then rises and touch 50 level then bounce back it’s a good sell signal .
if the symbol in uptrend direction then fall and touch 50 level then bounce back it’s a good buy signal .
this tool is very effective if the signal in the same direction of the main trend drection .
3- break lowest low or highest high .
i love to use RSI indicator exactly like candles chart and draw support and resistance levels on indicator .
if the indicator closed above or below highest high or lowest low it’s a good signal to entery .
the secret in using technical analysis on RSI indicator is to follow the main trend direction and the daily chart direction and you will gain some pips from this trading type .