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Posted By On 4/24/2007 10:11:00 PM
1. RSI stands for relative strength index.
2. Compares magnitude of stock recent gains to magnitude of stock recent losses.
3. Comparison turns that information into a number that ranges from 0-100.
4. RSI=30 means that stock is oversold.
5. RSI=70 means that stock is overbought.
6. If RSI moves below 30 line it would mean that stock could reverse any time.
7. If RSI moves above 70 it would mean that excessive momentum has beeen generated and a slow down may be around the corner.
8. BUY SIGNAL - It is generated when average line cuts RSI line from below and to move above it.
9. SELL SIGNAL- It is generated when average line cuts RSI from above and moves below it.
10. Divergence(means difference in trend between the RSI and underlying stock price) is created when RSI is moving lower and underlying stock is making new highs.It means that the rally lacks strength and vice versa.
11. Formula for calculation of RSI is deliberately not given as it tends to confuse and in this technical world all the indicator are available on internet.Visit
In case of any query please submit it in comment and I will answer it.
I have started the posts on technical indicators in order to enable every reader to interpret charts.

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