RSI indicator (relative strength index)
Relative strength index (RSI - abbreviation for relative strength index) - is one of the indicators of technical analysis. RSI helps to determine the probability of a change in price direction, as well as the strength of the trend.
The essence of the indicator's work is that the price cannot move in the same direction indefinitely, and sooner or later there will be a trend reversal.
RSI has only one line on the time scale and is below the price chart. The indicator always moves in the corridor from 0 to 100%. It should be noted that the RSI value below 20% is considered an oversold zone, and above 80% - an overbought zone. The space between the overbought and oversold zones is called the central zone.
Main point of use RSI indicator is that the overbought and oversold levels of the indicator work only in a sideways trend.
Divergence on RSI should be used to determine the earlier end of the trend, i.e. to close a position. It should also be taken into account that the indicator gives early signals, therefore, support and resistance lines should be used only to confirm the technical analysis of the price movement chart.