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RSI Trading Indicator Index Chart Pattern Setups & Indices Trend Lines

Index traders can draw lines showing trends on the RSI, just like they can draw them on price charts. RSI trend lines are drawn the same way as trend lines on the chart: by connecting highs that follow each other on the RSI indicator, or lows that follow each other on it.

RSI Chart Setups and RSI Trend Lines

RSI Trend Lines and Index Trend lines in Index Charts

RSI Patterns in Index Trading

RSI often forms patterns like head and shoulders or triangles. These don't show up on the price chart but appear on the RSI.

The RSI indicator often creates patterns on index charts, like head and shoulders or triangles, which might not be seen on the price chart. As you can see in the chart below, the Reverse/Inverse Head and Shoulders reversal setup is clearly illustrated using this RSI indicator.

RSI Trading Indicator Patterns and RSI Trend Lines

Index Patterns on RSI Chart Indicator

Support & Resistance Levels using RSI Indicator

Sometimes on the RSI indicator, Index chart support and resistance points are better shown than on the price chart.

In a steadily advancing market, it's crucial to maintain the integrity of support levels. If these levels are breached, it signals a potential reversal in the upward trend we've been observing.

In a downtrend, resistance levels should hold firm. If these levels are breached, it indicates the potential for the downward trend to reverse as prices surpass resistance levels.

RSI Trading Indicator Patterns and RSI Trend-Lines

Support & Resistance Levels on RSI Indicator

In the accompanying graphic, when the third level of resistance was breached, the prevailing downward trend shifted to an upward trajectory, and conversely, when the sixth support level was broken, the upward market trend reversed, thereby breaking its established line.

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