The RSI confirmed this move, which may have helped a trader have confidence in jumping on board the price move higher. The E-mini Nasdaq 100 Futures contract’s price made a substantial move from Low #1 to Low #2. The E-mini Nasdaq 100 Futures contract chart above shows the RSI confirming price action, along with a warning of future price reversals. Notice how in this example, decreasing the time period made the RSI more volatile, increasing the number of buy and sell signals substantially. In the chart below of Gold, two RSI time periods are shown, 14-day (default) and 5-day.

Varying the time period of the Relative Strength Index might increase or decrease the number of buy and sell signals. How To Read Potential Sell Signals With RSIĪ trader might sell when the RSI crosses below the overbought line (70). Please note, this is an example – not a recommendation. In this instance, a trader might find it profitable to enter the trade. You can see 6 different points on the example chart below, where the oversold line was crossed for Gold. How To Read Potential Buy Signals With RSIĪ trader might buy when the RSI crosses above the oversold line (30).

The relative strength index can be used to amplify trading strategies by making more informed decisions on market entry and exit points. How To Spot Buy And Sell Signals With RSI This eBay (EBAY) chart shows potential buy and sell signals.

Relative strength index