News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • #Bitcoin Outlook: $BTCUSD Bounce From 40K, Fake-out or Shake-out? - https://t.co/ixsRMKgCom https://t.co/KDQv4wgfot
  • While JPY gets clobbered, CHF decides to turn a blind eye to yields $CHF https://t.co/MViWZiiPZ7
  • The surprise 100 basis point cut from the Turkish central bank (to 18%) generated the expected pressure for $USDTRY. That said, I don't think it was the market that decided the momentum should die out at 8.8000 again... https://t.co/4jmOPnzzK9
  • surprised that $NQ is holding up so well with what rates are doing. 10 year yield at a 2 month high, $Nasdaq still holding resistance at prior support https://t.co/UBWBxY2nFC
  • The S&P 500 has recovered all the ground it lost at the start of the week and the Dollar has slumped post FOMC and PMIs. DailyFX's @JohnKicklighter gives a brief overview of the market for Thursday! https://t.co/jihKB44ELn
  • https://t.co/lbNvVbQq4n
  • The future taper isn't enough to urge the Dollar to a critical bullish break. In turn, $EURUSD has reversed shy of of August's trough and keeps in play an inverse head-and-shoulders pattern with a neckline at 1.19 https://t.co/EgUtX6Pmvy
  • USD/CAD testing short-term moving average support. Traders have cut their long exposure over the week. Get your market update from @nickcawley1 here:https://t.co/iEL5cbFnHs https://t.co/6kLkUFkFvU
  • In the West, that qualifies as a default action. Let's see how it is treated in the world's second largest economy https://t.co/PKWy7SE8Dt
  • Some Evergrande offshore bondholders do not expect company to make interest payment by Thursday deadline
RSI:  Overbought/Oversold

RSI: Overbought/Oversold

Richard Krivo, Trading Instructor

Instructor's Response:

Nicely done on this interpretation of the Relative Strength Index...

chart 2 3 10



Once the RSI is below 30 as it appears on the chart above, it can remain there for quite sometime. It is important to wait, as you rightly mention, for it to come back above 30 to provide an entry signal.  

Too many traders interpret the RSI being below 30 and in "oversold" territory to mean that it is time to immediately go long at the moment the oversold reading occurs.  What many traders do not realize is that even though a pair is oversold, it can become even more oversold.  The RSI can meander around below 30 with the price continuing to drop and thus wreaking havoc on any trader who took a long position as soon as it fell below 30.

It is critical to WAIT for it to move back above 30 before taking a long position.

Conversely, when the RSI is above 70 and in overbought territory, a trader must wait until the RSI moves below 70 to signal a short entry.

When trading this market, patience is definitely a prerequisite.

 

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES