# RSI Indices Trading Strategies

- RSI Overbought and Oversold Levels
- Relative Strength Index Divergence Setups
- RSI Classic Bullish and Bearish Divergence
- RSI Hidden Bullish and Bearish Divergence
- Swing Failure Strategy
- RSI Indices Trading Chart Patterns Indices Trading Trend Lines
- RSI Summary

# Relative Strength Index Indicator Indices Trading Strategy

**Relative Strength Index or RSI** is one of the most popular indices trading indicator used in Indices trading. It is an oscillator indices trading indicator which oscillates between 0 -100. This a indices trading trend following indices trading indicator. It indicates the strength of the indices trading trend, **values above 50 indicate a bullish** indices trading trend while **values below 50 indicate bearish Indices trend**.

## RSI Indices Trading Indicator Measures Momentum of a Indices Trend.

The center-line for the RSI is 50 indices trading indicator, crossover of the center-line indicate shifts from bullish to bearish indices trading trend and vice versa.

Above 50, the indices buyers have greater momentum than the indices sellers and indices price on the indices trading chart will keep going up as long as this RSI indices trading indicator stays above 50.

Below 50, the sellers have greater momentum than the buyers and indices price on the indices trading chart will keep going downwards as long as RSI indices trading indicator stays below 50.

**RSI Indices Trading Indicator - How to Trade Indices with RSI Indices Trading Indicator**

In the indices trading example above, when the indices trading indicator is below 50, the indices price kept moving in a downward indices trading market trend. The indices price continues to move down as long as RSI indicator was below 50. When the RSI indices trading indicator moved above 50 it showed that the momentum had changed from sell to buy and that the downward indices trading trend had ended.

When the RSI indices trading indicator moved to above 50 the indices price started to move upwards and the indices trading trend changed from bearish to bullish. The indices trading chart indices price continued to move upwards and the RSI indicator remained above 50 afterwards.

From the indices trading example above, when the indices trading trend was bullish sometimes the RSI would turn downwards but it would not go below 50, this shows that these temporary moves are just retracements because during all these time the indices trading price indices trading trend was generally upwards. As long as RSI indicator does not move to below 50 the current indices trading trend remains intact. This is the reason the 50 center line mark is used to demarcate the signal between bullish and bearish indices trading signals.

The RSI indices trading indicator uses 14 day period as the default period, this is the period recommended by J Welles Wilders when he introduced it. Other common periods used by Indices traders are the 9 and 25 day moving average.

The RSI indicator period used depends on the indices trading chart time frame you are using to trade, if you are using day indices trading chart time frame the 14 period will represent 14 days, while if you use 1 hour indices trading chart time frame the 14 period will represent 14 hours. For our indices trading example we shall use 14 day moving average, but for your trading you can substitute the day period with the chart time frame you are indices trading with.

##### To Calculate RSI Indices Trading Indicator:

- The number of days that a indices trading market is up is compared to the number of days that the indices trading market is down in a given time period.
- The numerator in the basic formula is an average of all the indices trading sessions that finished with an upward indices price change.
- The denominator is an average of all the down indices trading sessions closes for that period.
- The average for the down days are calculated as absolute numbers.
- The Initial RSI is then turned into an oscillator.

Sometimes very large up or down movement in indices price in a single indices trading session indices price period may skew the calculation of the RSI average and produce a false indices trading signal - whipsaw signal - in the form of a spike.

**RSI Center-line:** The center-line for this indices trading indicator is 50. A value above 50 implies that the indices trading market indices trading trend is in a bullish phase as average gains are greater than average losses. Values below 50 indicate a bearish phase in the indices trading market indices prices are generally closing lower than where they opened.

**Overbought and Oversold Levels:** Wilder set the RSI overbought and oversold levels at which the indices trading market moves are overextended at 70 and 30.