RELATIVE STRENGTH INDEX (RSI)

C H E A T S H E E T

WHAT IS THE RSI INDICATOR?

• A momentum indicator that measures the magnitude of recent changes in an assetʼs price.

• Can indicate when an asset is overbought or oversold.

• Should be used in conjunction with other indicators.

HOW DOES IT WORK?

• RSI rises when the number and size of positive closes increase.

• RSI drops when the number and size of losses increase.

• The indicator ranges between 0 and 100.

• < 30 can indicate oversold and > 70 can indicate overbought.

• Buy and sell signals can be created when the RSI line crosses the 30 and 70 lines.

FORMULA (No need to know this as your trading platform will do the calculations)

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 RSI INDICATOR STRATEGY EXAMPLES
1. WITH-TREND ENTRY
• In a high-timeframe uptrend, when RSI crosses below and then back above the 30 line on the
lower timeframe, it can indicate a pullback entry.

• In a high-timeframe downtrend, when RSI crosses above and then back below the 70 line on
the lower timeframe, it can indicate a pullback entry.

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The information provided within this PDF is for educational purposes only.
 RSI INDICATOR STRATEGY EXAMPLES
2. RANGE TRADING
• Enter at support and resistance as the price crosses into and out of the 30 and 70 zones.

3.COUNTER TREND WITH RSI DIVERGENCE

• When the trendline and RSI line diverge it can indicate trend reversal.

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The information provided within this PDF is for educational purposes only.