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🚨 Unlocking the RSI Indicator: The Market's Lie Detector🚨

What is RSI?

The Relative Strength Index (RSI) is a momentum-based oscillator that measures the speed and change of price movements. It operates on a scale of 0 to 100 and provides valuable insights into the market's sentiment.

How to Read RSI

- Above 70: Overbought - A reading above 70 indicates that the trading instrument may be overvalued and due for a correction.

- Below 30: Oversold - A reading below 30 suggests that the market may be undervaluing the asset, presenting a potential buying opportunity.

RSI Calculation

RSI compares the magnitude of recent gains to recent losses, indicating which side of the market is winning. It's like a tug-of-war between bulls and bears.

Trading with RSI

- Overbought (RSI ≥ 70): Consider selling or trimming your position, as the market may be running out of fuel.

- Oversold (RSI ≤ 30): Look for buying opportunities, as the market may be undervaluing the asset.

The Sweet Spot: Divergences

- Bullish Divergence: Price makes new lows, but RSI makes higher lows.

- Bearish Divergence: Price makes new highs, but RSI makes lower highs.

Bonus Tip: RSI in Different Timeframes

- Use RSI across various timeframes to spot trends and potential reversals.

- A stock might be oversold on the daily chart but overbought on the weekly chart.

By mastering the RSI indicator, you'll gain a valuable tool to navigate the markets and make informed trading decisions.

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