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Relative Strength Index

Introduction to Relative Strength Index (RSI)

Section titled “Introduction to Relative Strength Index (RSI)”

The Relative Strength Index Technical Indicator (RSI) is a price-following oscillator that ranges between 0 and 100.

Section titled “Recommended Periods for RSI”

When Wilder introduced the Relative Strength Index, he recommended using a 14-period RSI. Since then, the 9-period and 25-period Relative Strength Index indicators have also gained popularity.

Divergence Analysis

Section titled “Divergence Analysis”

A popular method of analyzing the RSI is to look for a divergence in which the security is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal.

Failure Swing Confirmation

Section titled “Failure Swing Confirmation”

When the Relative Strength Index then turns down and falls below its most recent trough, it is said to have completed a failure swing. The failure swing is considered a confirmation of the impending reversal.

Signals of Relative Strength Index

Section titled “Signals of Relative Strength Index”

The following signals of Relative Strength Index are used in chart analyzing: