Trend Trading For Dummies
Book image
Explore Book Buy On Amazon

The relative strength index (RSI) is an indicator that compares upward and downward movements in closing price over a period of time of your choice (commonly 14 bars). As with any indicator, traders use the RSI in many ways. One of the most typical ways is to go long when RSI moves below a value of 40 and then rises above it.

[Credit: Figure by Barry Burns]
Credit: Figure by Barry Burns

In a downtrend, a short signal is when RSI moves above 60 and then moves back below it.

[Credit: Figure by Barry Burns]
Credit: Figure by Barry Burns

About This Article

This article is from the book:

About the book author:

Dr. Barry Burns is the founder of TopDogTrading.com, which he created to help students shorten their learning curve in becoming professional traders. He was also the lead moderator for the FuturesTalk.net chat room, has written numerous articles, and has been featured in several books and online trading radio interviews.

This article can be found in the category: