Overbought or Oversold

bigdolly

2nd Lieutenant
Messages
1,083
RSI for sure. But this on its own will not provide a trading strategy.
RSI use is not limited to primitive rules like 30 and 70 levels. There are also RSI divergence & convergence with price (indicator of reversal) as well as strategies which are based on interplay of short and long RSIs (similar to MACD technique), btw it's my favourite tool.
 

JayJones

Banned Spammer
Messages
324
RSI use is not limited to primitive rules like 30 and 70 levels. There are also RSI divergence & convergence with price (indicator of reversal) as well as strategies which are based on interplay of short and long RSIs (similar to MACD technique).
Yes I do often look for divergence as another confirmation.
 

RahmanSL

Major
Messages
2,732
Some time back someone, who re-started trading the forex market after a few years absence, told me that he just trade what he see on the screen and found that to be much more reliable than any indicators. But do pay attention to economic data releases and breaking news.
 

bigdolly

2nd Lieutenant
Messages
1,083
Trend channels are relatively easy way to understand if an asset is overbought or oversold. If the price break the channel an initial hypothesis is that it should go back into channel (fake breakout) hence it is either overbought or oversold. Depending on the price ability to sustain breakout I determine if fake breakout is a correct guess.
 
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