The relative strength index (RSI) is a technical analysis indicator that shows the strength of a trend and the probability of it changing.
RSI is seen as an oscillator, which means that it's strength is showing reversal and entry points.
It is represented visually as a line that follows a chart, moving within the boundaries of the values 0 and 100.
The RSI line periodically goes beyond the boundaries of 30 and 70, crossing the upper or lower level.
We recommend leaving the period equal to 14. This is the procedure used by Wells Wilder, the creator of the indicator.
By reducing the RSI period, you will receive more signals, but they will be less accurate.
By increasing it, you will receive fewer signals, but they will be more accurate.
You can also change the color and thickness of the indicator line.
The main principle for trading using the oscillator is trading in the direction of the developing trend.
If the RSI does not coincide with the price chart (divergence), then the trend may soon reverse.
If the RSI line rises above 70, this implies that the asset is overbought.
If it drops below 30, this implies that the asset is oversold.
Overbought is when an asset’s price has risen considerably and may start to drop.
After overbought conditions appear, the trend may reverse and the price starts to fall after the increase.
When the RSI crosses 70 going downwards, it is probably signaling a downtrend.
Oversold is a situation where an asset’s price has dropped considerably and may start to rise.
After oversold conditions appear, the trend may reverse and the price starts to rise after the drop.
When the RSI crosses 30 going upwards, it is probably signaling an uptrend.
We recommend activating the intermediate levels of +2σ and -2σ in the indicator settings.
There is a 95.4% likelihood that the price will be located in the interval between +2σ and -2σ, and a 99.7% likelihood that it will lie between +3σ and -3σ.
We recommend leaving the period of the Inversion Bollinger at the default value of 20. It is acceptable to change the range within 13 to 24. As an alternative, it is possible to use whole numbers of 50, 100, 150, 200, or the number of days in the trading or calendar years, 240 or 365. In doing so, it is necessary to understand that using long periods reduces the sensitivity of the indicator and makes it unsuitable for markets with low volatility.
The indicator's strongest signal is touching, or in some cases crossing, the +3σ or -3σ lines.
If the indicator touches or crosses the upper +3σ level, open a short-term down trade. If the Inversion Bollinger touches or crosses the lower -3σ level, open a short-term up trade.
If the indicator is above the +2σ, the chart shows that the market is overbought. If it is below the -2σ, it shows that the market is oversold.
The signal of a decrease appears at the moment the indicator crosses the +2σ level downward.
The moment the indicator crosses the -2σ level upward is the signal of an increase.
There are a handful of assets for which pronounced trend movements can often be observed, for example, currency pairs including JPY. For such assets, it is possible to use a signal called "Walk the Bollinger Line."
If there is a pronounced upward trend on the chart and the Inversion Bollinger is fluctuating around the +2σ level, then you may open short-term up trades.
Conversely, if the chart shows a downward trend and the indicator reads around the -2σ level, you may open positions in the direction of the trend, downwards.
It is an oscillator composed of two classic Bollinger Bands indicators.
It is represented graphically as a line which moves on the chart between two extreme positions: the +3σ and -3σ standard deviations.
The Stochastic RSI technical indicator is a hybrid of two indicators: Stochastics and the Relative Strength Index (RSI). The StochRSI takes the best of each, so it allows for more accurate identification of periods when the asset analyzed is overbought or oversold.
The overbought level begins at the 0.8 (80%) mark, the oversold, at 0.2 (20%).
It is best to leave the period for the indicator at the standard 14. As with any other indicator, increasing the period reduces the number of signals but increases their quality, and vice versa. It is best to make changes in increments of 7, for example, 7, 14, 21, or 28.
If the chart is in an uptrend, then a buy signal appears when the StochRSI has already crossed the oversold level of 0.2 and is moving upward. Conversely, during a downtrend, a sell signal appears when the indicator has crossed the overbought level of 0.8 and is moving downward.
As a secondary signal, you can consider the crossing of the centerline at 0.5 (50%).
The indicator's downward crossing the centerline at 0.5 can be taken as a secondary signal of decrease. Conversely, crossing the 0.5 line upwards is a signal of increase.
The StochRSI may reach the overbought or oversold level and stay there for a long period of time. Movement of the indicator above 0.8 or below 0.2 may also indicate a strong trend, and the indicator may stay in the overbought or oversold zones for a long period of time.
The indicator will occasionally stay near 0 or 1. This is considered a strong indication of the current trend and means that there will soon be a reversal of the trend.
The Stochastic indicator is an oscillator.
It helps trace the change in an asset’s price and, therefore, identify the optimum points for entering the market.
The Stochastic consists of 2 lines displayed on a scale from 100 to 0.
The oscillator’s lines cross the boundaries at 20 and 80, which helps identify an overly high or overly low asset price.
The first line (%K) shows the current closing price for the selected price range.
The second (%D) is the simple moving average, which is calculated on the basis of the first line (%K).
We recommend leaving the standard periods: 14, 3 and 2.
You can also change the color and thickness of the indicator lines if you want.
The basic signal that the oscillator generates is overbought and oversold.
The Stochastic also shows divergence.
If the indicator lines rise above 80, it means that the asset is overbought.
Overbought is when an asset’s price has risen considerably and may start to drop.
As a rule, when an asset is overbought, a possible trend reversal follows.
When the Stochastic lines cross 80 going downwards, it is probably signaling a downtrend.
If the oscillator's lines fall below 20, the asset is oversold.
Oversold is a situation where an asset’s price has dropped considerably and may start to rise.
Both oversold and overbought conditions are usually followed by a trend reversal and, accordingly, a change in the asset’s value.
When the Stochastic lines cross 20 going upwards, it is probably signaling an uptrend.
Divergence is a discrepancy between the movement of the indicator and the chart. Divergence usually indicates a trend reversal.
So, if the chart lines form a series of maximums, but the Stochastic lines, in contrast, are descending, you can expect a descending trend to start.
If the chart traces a series of new minimums, but the Stochastic lines have started rising, you can expect the price to start to rise.
The moving average convergence/divergence (MACD) is a technical analysis indicator.
The MACD, which shows the direction and strength of a trend, helps find the optimum times to open trades.
It consists of two moving average lines and a histogram.
You can change the period, color and thickness of the indicator lines.
We recommend keeping the standard period setting.
If you increase the period, you will get more accurate trading signals, but in less volume - the indicator will ignore them.
If you reduce it, there will be more signals, but they will be less accurate.
If a bar of the indicator’s histogram crosses the zero boundary moving upward and the MACD lines have crossed and are rising, this is a signal that the price will probably go up.
Note: you need to wait until the bar is completely formed before you open a trade.
Follow the timer on the chart – the end of the countdown means that the bar is finished forming.
If a bar of the indicator’s histogram crosses the zero boundary moving downward and the MACD lines have crossed and are descending, this is a signal that the price will probably go down.
One more important point: as the price develops, the distance between the MACD line and signal line will change.
The objective of the histogram is to show how close or far apart the two indicator lines are.
Also, when the histogram is above the zero line and its value is increasing, the price usually rises.
When the histogram is below the zero line and its value is increasing, the price usually falls.
DeMarker is a highly accurate oscillator that helps determine the strength and direction of a trend and find its reversal points.
DeMarker moves between two values (0 and 1), periodically going beyond the boundaries of 0.3 and 0.7.
If these levels are crossed, it is a signal to open a trade with the corresponding forecast.
Set the way the oscillator is displayed. There are 2 ways to do so on the platform: line and bar chart
We will use the bar chart in strategies in combination with other indicators.
The regular line is used mostly.
The DeMarker oscillator generates two main signals – overbought and oversold.
So, if the indicator line rises above 0.7, the asset is overbought and a trend reversal should be expected, i.e., a price drop.
If the indicator line falls below 0.3, the asset is oversold and a trend reversal and increase in the asset’s value are expected.
Bears Power is a supplemental indicator.
It is calculated as the difference between the lowest price and the 13-period EMA.
We recommend using the standard indicator settings of EMA period 13.
The color and thickness of the Bears Power line can be changed for ease of analysis.
The Bears Power indicator only generates a buy signal.
If the indicator’s line is below zero and is moving up, it is a sure sign of a trend reversal and an increase in the price of the asset.
The biggest sign of an increase is the reversal of Bears Power upwards after a long decrease below the zero line.
We recommend combining Bears Power with at least one trend indicator such as SMA.
An extra indicator is necessary to confirm the Bears Power signal.
It isn’t worth opening an Up trade if the indicator line is below zero and is moving downwards. This behavior of Bears Power confirms the downward (bearish) trend.
Bulls Power is a supplemental indicator.
It is calculated as the difference between the highest price and the 13-period EMA.
We recommend using the standard indicator settings of EMA period 13.
The color and thickness of the line can also be changed for ease of analysis.
The indicator generates only a sell signal.
If the indicator’s line is above zero and is moving downwards, it is a sure sign of a trend reversal and a decrease in the price of the asset.
The biggest sign of a decrease is the reversal of Bulls Power downwards after a long increase above the zero line.
We recommend combining Bulls Power with at least one trend indicator such as SMA.
An extra indicator is necessary to confirm the Bulls Power signal.
It isn’t worth opening a Down trade if the indicator line is above zero and is moving upwards. This behavior of Bulls Power confirms the upward (bullish) trend.
Williams %R is an oscillator.
It helps determine the direction of the price of an asset and find the reversal points of a trend.
Williams %R can move between 0 and -100. However, it periodically crosses -20 and -80.
Crossing -20 signifies that the price of an asset has reached too high a level.
Crossing -80 signifies that the price of an asset has reached too low a level.
When it comes to numerical values, we recommend using the standard settings: Period 14, Upper Band of -20 and Lower Band of -80.
The following can be changed for ease of analysis:
– The display mode of the indicator from “Central” to “Line”. The color and thickness of the line can also be changed.
– The display of levels -20 and -80. To do this, tick opposite Upper Band and Lower Band.
These settings will make it easier to read the indicator’s main signals of overbought and oversold.
Overbought is a condition of an asset that occurs when its price has risen quickly – meaning that a fall in the price can be expected.
If the Williams %R line increases above -20, the asset is overbought.
If the Williams %R line falls below -20, it is a sure sign of a trend reversal and a decrease in the price of an asset.
Oversold is a condition of an asset that occurs when the price falls quickly before rising again.
If the Williams %R line falls below -80, the asset is oversold.
If the Williams %R line rises above -80, it is a sure sign of a trend reversal and an increase in the price of an asset.
Gator is an oscillator.
It can take the form of a bar chart, lines, and shaded areas.
The oscillator is most often displayed as a bar chart.
The bar chart consists of red and green bars that are plotted starting at the zero level.
Green bars indicated that the oscillator's bar chart is currently moving upward. Red bars, that it is moving downward.
Gator is essentially a modified version of the Alligator indicator and a supplement to it.
The Gator bar chart shows the discrepancy between Alligator lines.
If the bar chart lines are converging and are near the zero level, then Alligator lines will also be nearby.
This indicates a lateral trend on the market.
If the Gator bar chart lines are separating, the Alligator lines are also moving apart.
This indicates that there is a clear up- or downtrend on the market.
We recommend using the standard indicator settings.
Gator does not allow one to accurately determine the market entry point, so it is not used as a stand-alone indicator.
Gator is usually only used in combination with other indicators.
This oscillator generates two supplemental signals.
When the Gator’s histogram lines are near the zero mark, the market is showing a sideways trend.
The longer the Alligator’s lines are intertwined and the Gator is near the zero mark, the stronger the trend movement is expected to be.
When the Gator’s histogram lines diverge, a clear trend has formed in the market.
You can open trades in its direction.
Momentum is an oscillator.
It helps determine the direction of the price and find trend reversal points.
Momentum takes the form of a line that moves and periodically crosses the 100 level.
If the following 2 signals appear on the chart one after another, the trend could reverse and the price start to fall:
– The oscillator reaches the top values.
– Then it turns downward and starts to move toward 100.
If the following 2 signals appear on the chart one after another, the trend could reverse and the price start to rise:
– The oscillator line reaches the bottom values.
– Then it turns upward and starts to move toward 100.
The following 2 signals indicate that the price will likely continue to fall:
– A downtrend has formed on the chart.
– The Momentum line has intersected the 100 level top down and continues to fall, which confirms a bearish trend.
I recommended keeping the oscillator's standard settings — period 14.
Combine Momentum with other indicators.
To trade on a trend reversal, also use oscillators; to trade on the direction of the price, also use trend indicators.
The Detrended Price Oscillator is an oscillator that helps to determine the direction of the price and generates signals warning of a trend reversal.
The Detrended Price Oscillator can be a line, bar chart, or tinted area.
It is most often displayed as a line.
It moves with the chart and periodically intersects the zero level.
I recommend keeping the standard settings — period 21 and display as a line.
Combine the Detrended Price Oscillator with other indicators.
To trade on a trend reversal, combine it with oscillators; to trade on the direction of the price, combine it with trend indicators.
The following 2 signals indicate that the price will likely continue to rise:
– An uptrend has formed on the chart.
– The oscillator line has intersected the zero level bottom up and continues to rise, which confirms a bullish trend.
The following 2 signals indicate that the price will likely continue to fall:
– A downtrend has formed on the chart.
– The oscillator line has intersected the zero level top down and continues to fall, which confirms a bearish trend.
Convergence is a disparity between the price chart and the indicator, where the chart is moving downwards and the oscillator’s line is moving upwards.
In other words, they are moving towards each other.
If a convergence appears between the chart and the Detrended Price Oscillator, a trend reversal is possible and the price will begin to rise.
Note: convergence is a supplemental signal. It does not allow one to accurately determine the entry point.
We do not recommend opening trades using only this strategy.
Divergence is a discrepancy in the price chart and indicator in which the chart is headed up and the oscillator line is headed down.
In other words, they move in the opposite direction, away from one another.
If there is divergence between the chart and Detrended Price Oscillator, the trend might reverse and the price will start to fall.
Divergence, like convergence, is a secondary signal.
I don’t recommend opening trades on the basis of it alone.
Awesome Oscillator is an oscillator.
It helps identify the direction of the price and the strength of the trend and find its reversal point.
Awesome Oscillator can take the form of a bar chart or line.
The oscillator most often takes the form of a bar chart.
The indicator’s bar chart consists of red and green bars.
They are plotted on the zero level.
Green bars indicate a price rise; red ones, a fall.
I recommend using the indicator’s standard settings — display as a bar chart.
If a red bar appears after a series of green bars on the bar chart, the indicator has started to reverse.
This Awesome Oscillator position indicates that the trend is likely to reverse and the asset’s price is likely to fall.
If a green bar appears on the bar charter after a series of red bars, the indicator has started to reverse.
This Awesome Oscillator position indicates that the trend is likely to reverse and the asset’s price is likely to rise.
Divergence is a discrepancy between the price chart and the indicator.
If a divergence appears between the chart and the Awesome Oscillator, a trend reversal is possible.
If the oscillator moves downward and the chart moves upward, the asset price may reverse and start to fall.
This divergence is called bearish.
If the oscillator moves upward and the chart moves downward, the asset price may reverse and start to rise.
This divergence is called bullish.
Please note: divergence is a secondary signal. It cannot identify the exact entry point.
I don’t recommend opening trades on the basis of it alone.
The following 2 signals indicate that the price will likely continue to fall:
– A downtrend has formed on the chart.
– The Awesome Oscillator bar chart has crossed the zero level top down, which confirms a bearish trend.
The following 2 signals indicate that the price will likely continue to rise:
– An uptrend has formed on the chart.
– The Awesome Oscillator has crossed the zero level bottom up, which confirms a bullish trend.
I advise combining the Awesome Oscillator with other indicators.
To trade on the direction of a price, combine it with trend indicators; to trade on a trend reversal, with oscillators.
Rate of Change is an oscillator.
It helps determine the direction of a trend and find its reversal points.
The Rate of Change oscillator usually takes the form of a line.
It moves with the chart and periodically intersects the zero level.
If the following 2 signals appear on the chart one after another, the trend could reverse and the price start to fall:
– The oscillator reaches the top values.
– Then it turns downward and starts to move toward zero.
If the following 2 signals appear on the chart one after another, the trend could reverse and the price start to rise:
– The oscillator line reaches the bottom values.
– Then it turns upward and starts to move toward zero.
The following 2 signals indicate that the price will likely continue to fall:
– A downtrend has formed on the chart.
– The oscillator line has intersected the zero level top down and continues to fall, which confirms a bearish trend.
The following 2 signals indicate that the price will likely continue to rise:
– An uptrend has formed on the chart.
– The Rate of Change line has intersected the zero level bottom up and continues to rise, which confirms a bullish trend.
I recommend keeping the standard settings — period 14 and display as a line.
Combine Rate of Change with other indicators.
To trade on a trend reversal, combine it with oscillators. To trade on the direction of the price, combine it with trend indicators.
The following signals consistently show signs of price trend and growth in the asset:
– Aroon Up line 30+.
– The Aroon Down line goes down with it.
– Lines cross.
– Lines are on 30 and 70.
We recommend using Aroon Up and Aroon Down with other indicators.
Combine them with trending indicators when trading on the movement of a price, and with oscillators when trading on the reversal of a trend.
Aroon is an oscillator.
It helps determine the direction and strength of a trend, as well as find the points of its reversal.
It’s made up of two lines: the blue Aroon Up line and the yellow Aroon Down line.
These lines move between values of 0 and 100, and periodically cross the levels of 70, 50 and 30.
The lines of the oscillator crossing these levels is a signal to open a trade.
We recommend using the indicator’s standard settings: a Period of 25 with both lines displayed.
For convenience, you can change the thickness and color of the Aroon Up and Aroon Down lines.
There are 3 signals that show that a price is likely to continue falling:
– There is a downward trend in the chart.
– The Aroon Up line is below a level of 30.
– The Aroon Down line is above a level of 70.
Parallel motion of the Aroon Up and Aroon Down lines provides extra confirmation that a strong downward trend is forming in the market.
There are 3 signals that show that a price is likely to continue growing:
– There is an upward trend in the chart.
– The Aroon Up line is above a level of 70.
– The Aroon Down line is below a level of 30.
Parallel motion of the Aroon Up and Aroon Down lines provides extra confirmation that a strong upward trend is forming in the market.
The consistent appearance of the following signals indicates the reversal of a trend and a fall in the price of an asset:
– The Aroon Up line falls below 70.
– The Aroon Down line rises up to meet it.
– The lines cross.
– Both lines are on the boundaries of 30 and 70.
Сommodity Сhannel Index (CCI) is an oscillator.
It helps to find the reversal points of a trend.
CCI consists of one line, which may change its direction depending on the movement of the price and crosses the levels of 100 and -100.
When the oscillator line crosses these levels, it is a signal to open a trade.
For convenience of signal analysis, we recommend using the standard settings: Period 20.
You can change the color and thickness of the CCI line.
Generally, CCI generates signals that indicate a trend reversal: overbought, oversold and divergence.
The second group of CCI signals are alternative signals. They indicate the continuation of a trend.
Overbought is when an asset’s price has risen considerably and may start to drop.
If the CCI line increases above 100, the asset is overbought.
As a rule, when an asset is overbought, a trend reversal follows.
If the CCI line falls below 100, it is a sure sign of a decrease in the price of an asset.
Oversold is a situation where an asset’s price has dropped considerably and may start to rise.
If the CCI line falls below -100, the asset is oversold.
As a rule, when an asset is oversold, a trend reversal follows.
If the oscillator rises above -100, it is a sure sign of an increase in the price of an asset.
Divergence is the condition when there is discrepancy between the movement of an indicator and the price chart.
As a rule, divergence indicates a possible trend reversal.
If the price chart sets a new high and the CCI stays at the same level or falls, you can expect the price to decrease.
If the price reaches a new minimum and the CCI stays at the same level or rises, you can expect the price to increase.
If the chart has the following three signals, the price of an asset is likely to continue to rise:
– Clear uptrend
– The CCI line rises above 100.
– The last candlestick closed in green, and the new candlestick is being formed in the same color.
If the chart has the following three signals, the price of an asset is likely to continue to fall:
– Clear downtrend
– The CCI line falls below -100.
– The last candlestick closed in red, and the new candlestick is being formed in the same color.
For more accurate forecasts, we recommend combining the oscillator with other analysis tools. For example, other indicators or support/resistance levels.
The optimum timeframes for working with CCI are 1 hour and above.
CCI is best suited for trading during a sideways trend (flat trend).
Overbought is when an asset’s price has risen considerably and may start to drop.
If the CCI line increases above 100, the asset is overbought.
As a rule, when an asset is overbought, a trend reversal follows.
If the CCI line falls below 100, it is a sure sign of a decrease in the price of an asset.