Equity Market Pundit

Technical Analysis RSI Indicator

The day has been so far moving nowhere Indian markets remained closed .... In the commodity segment precious metals say Gold is moving no where and still hovering aroud $ 671.

So now let us gain some knowledge about yet another Indicator ....RSI

RSI is Relative strenth index, A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula:
RSI = 100 - (100/(1+RS))

RS = Average of x days' up closes / Average of x days' down closes As you can see from the chart below, the RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

Trading Futures using RSI