SFC RSI

31. Okt. 2022

This indicator can provide advanced information about the current market:

1. Divergence
Divergence do not mean only reversal but retracement too. Divergences not happen at every retracement, but 90% of the time. With divergences you can predict the pull backs. If RSI fail to make a divergence, composite index will do. That is why divergences from Composite Index are more reliable.
- Hidden divergence shows when pull back is over.

2. RSI Ranges
o If RSI moves between 60 and 40 – probably the market consolidate
o If RSI reach 80 or 20 –price probably will retrace

3. RSI Bands
In normal market condition RSI should be contained by the bands. If RSI goes out of the
bands, it represent overbought or oversold market.

4. RSI Moving Averages
- Moving averages represent dynamic support and resistance
- If fast moving average is above slow – it is bullish market condition and vice versa

5. Trend lines
Trend lines represent static support and resistance

6. Patterns and Elliot waves
- Chart patterns can be drawn to RSI , same as the chart
- Elliot Wave principle can be applied

RSI can give provide much more information about the price, for example:
- If RSI break support or resistance, price will follow it
- If divergence appear, price will go back to the origin point
- Fibonacci levels can be also applied. Important levels are 61.8% and 38.2%


RSI can be displayed as Heikin Ashi candles, in order to give you more smoother signal about the current trend.