Exclusive Benefits for High-Volume Traders Get more value with cash rebates, earned interest, waived bank fees and more when you trade high volumes on our platforms. How cheap or costly are world cities in Indian rupees? RSI I look at lastly as a small helper. Create new orders directly from the charts and click and drag to easily edit existing orders.
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When it is below 30, the market is oversold. When it is above 70, the market is overbought. I will talk about the RSI overbought and oversold territories in a separate article. In this article, I am going to talk about the 50 level that sits between the 30 and 70 levels.
The below screenshot shows a strong uptrend that reverses after forming a very strong bearish engulfing pattern the yellow zone. For those who trade based on the candlestick patterns, this is a very strong trade setup to go short. However, those who need more confirmation, can easily use RSI 9. This is an important confirmation indicating that the uptrend is exhausted and the bears have taken the control:. When the uptrend was strong and the price was going up strongly, RSI had broken above the 70 level and was moving above this level in the overbought area the red zone.
This is how RSI gives a strong confirmation for a candlestick pattern. Compare the above example with so many other weak candlestick patterns that are not confirmed by RSI.
Or you consider the candlestick patterns, but you enter only when they are confirmed and followed by a technical analysis event like a support or resistance breakout. But the question is could that support breakout also be confirmed by RSI?
This support line was broken by the candlestick 4. You might wonder whether the support line was a valid and reliable support line, and its breakout was valid and reliable enough to go short or not.
RSI and then the candlestick 5 and 6 could answer this question. The below screenshot shows that when candlestick 4 closed below the support line, RSI was already way below the 50 level. Also, when the candlesticks 5 and 6 tried to retest the broken support line, RSI was still moving below the 50 level and was going down.
Even when the price tried to retest the broken support line and the Bollinger Middle Band one more time after several days candlestick 7 , RSI was still below the 50 level. So the support breakout was confirmed by RSI, and looked like a reliable and valid breakout, specially when candlesticks 5 and 6 accurately and precisely retested the broken support line:.
Follow the candlesticks numbers on the below chart. As you see, candlestick 1 closed above the resistance line. For me, that downtrend was too strong to be reversed so easily. So I would not trust the resistance breakout if I wanted to trade based on the technical analysis and resistance breakout. I need more confirmation. RSI confirmed that the resistance breakout was valid, because it had moved up from the oversold area the red zone to the 50 level area and when candlestick 1 closed, RSI had already broken above the 50 level.
Look at the candlesticks 2 and 3 and the way they retested the broken resistance, and how the broken resistance worked as a strong support and did not allow any of these candlesticks to go down and close below it. Finally, candlestick 4 closed as a bullish candlestick above the broken resistance, indicating that most probably the price wanted to go up.
Candlesticks 5 and then 6 strongly confirmed that bulls had taken the control. The price went up for pips after the candlestick 6 formed. Try RSI 9 with your own trading system and see if it can confirm the trade setups or not.
I had to employ a lot of self discipline to clear my charts of many indicators and oscilators after you taught us that candle sticks combined with BollingerBands are the only leading indicators and MACD is the best way to confirm a trade setup. It is confusing, one of these days I will have a lot of clutter on my charts again and spend hours analysing al of it. Is this part of the trading plan tat you are teaching?
I wrote a few articles about RSI because it is the last article that I believe it works. However I thought maybe some traders like to have an extra confirmation for the candlestick patterns they locate. Hi Chris, nice article, thank you. I try to trade only with BB and candlesticks like you. I would like to ask you, how many trades you did this August? I have taken 5 position in one of my account and 4 with the other one.
The number of positions is not impressive, but the result is great. Rupee recovers 9 paise to end at Choose your reason below and click on the Report button. This will alert our moderators to take action. Get instant notifications from Economic Times Allow Not now You can switch off notifications anytime using browser settings. Technicals Technical Chart Visualize Screener. NIFTY 50 10, Drag according to your convenience.
The rupee on Wednesday plunged to an all-time low of The domestic unit has emerged as the worst performing Asian currency in , with a fall of 9. It had opened 22 paise lower at The domestic currency on Tuesday bounced back in tepid fashion from record closing low, gaining 6 paise to end at A report said that the foreign fund inflows would help finance the current account deficit CAD which is expected to widen to 2.
Recently, Soumya Kanti Ghosh, the Group economic advisor of the State Bank of India SBI said that any sudden appreciation or depreciation of the rupee was not good as it adds volatility in the market. The rupee had experienced an orderly depreciation as it moved from Rs 64 to a dollar to Rs 70 over a span of five to six months.
Whether the rupee touches Rs 72, it hardly matters, he said. On the global front, oil markets were stable on Wednesday, buoyed by falling supplies from Iran ahead of US sanctions but held in check by rising production outside the OPEC countries, Reuters reported.