1, principle: the principle of RSI is simply to get the strength of buyers and sellers through digital calculation, reflecting the supply and demand of buyers and sellers in the market. For example, there are 100 people facing a commodity. If more than 50 people want to buy and compete to raise prices, the price of goods will definitely rise. On the contrary, if more than 50 people compete to sell, the price will naturally fall.

According to the strength index theory, any sharp rise or fall of the market price is between 0- 100. According to the normal distribution, it is considered that RSI values are mostly between 30 and 70. Usually at 80 or even 90, the market is considered to be overbought, and the market price will naturally fall back and adjust. When the price falls below 30, it is considered oversold and the market price will rebound.

2. Calculation method: The relative strength index is calculated by comparing the closing prices in a certain period of time.

RSI = 100-[ 100/( 1+RS)]

Where RS= the average value of the sum of the closing price increase over a period of time/the average value of the sum of the closing price decrease over a period of time.

3. Indicating function of 3.RSI

Trend theory points out that the low point of each secondary fluctuation is getting higher and higher in the process of rising. If the low points of each wave are connected, they can be connected into a straight line, which is the upward trend line. If the low point of each secondary fluctuation is getting lower and lower in the process of falling, it can be connected with the low point of the past or in a straight line, which is the downward trend line. According to the uptrend line and downtrend line, we can see the changing direction of futures prices in a period of time.

In the graph of strength indicators, on the surface, the graph formed by connecting the RSI of each day is extremely irregular, but in fact, in the upward trend, because the futures price moves up, the strength indicators move up accordingly, while in the downward trend, the futures price moves down and the strength indicators move down. In other words, the uptrend line and downtrend line can also be drawn by connecting the low points shown in the strength indicator diagram with the low points or connecting the high points with the high points.

As can be seen from the above analysis and calculation, the functions of RSI mainly include the following aspects:

First, the RSI value is in the range of 0- 100. Generally speaking, when the RSI value remains above 50, it is a strong market, and when it is below 50, it is a weak market.

B. When the RSI value fluctuates between 50 and 70, it indicates that the market is overbought. If it continues to rise, if it exceeds 90, it will reach the serious overbought area, and the price has reached the top, which is likely to turn up and down in a short time.

C. When the RSI value drops to 50-30, it indicates that the market is oversold; If it falls below 10, it means that it has entered a serious oversold area and the price may stop falling and rebound.

D. the determination of overbought and oversold scope also depends on two factors: the first factor is market characteristics; A stable market with little fluctuation can generally stipulate that RSI is overbought above 70 and oversold below 30. A sharply changing market can stipulate that the RSI value is oversold above 80 and oversold below 20. It should be noted that oversold and oversold themselves do not constitute a signal to enter or leave. Sometimes the market changes too fast, and the RSI value will exceed the normal range. At this time, the overbought or oversold RSI often loses its function as an early warning signal for entry or departure. The second factor is the time parameter used to calculate RSI. Different time parameters have different definitions of overbought and oversold. Interval division that can be used as a reference:

First, the RSI value with a period of 14, where more than 70 is overbought and less than 30 is oversold.

Two. If the RSI value with a period of 9 exceeds 80, it is overbought, and if it is below 20, it is oversold.

Three. A week ago, the RSI value was 6; if it was over 90, it was oversold; if it was below 15, it was oversold.

Four. When the RSI value is between 40 and 60, the market will be in a consolidation pattern.

E. RSI goes up and the price goes down, or RSI goes down and the price goes up. This is called "running backwards". Reverse means that the market may reverse.

4. Research on trading opportunity of 4.RSI indicators.

I. RSI support line and RSI pressure line

In general, the expressions of pressure line and support line in the K-line chart are very common, and investors are familiar with them. But it is special to distinguish pressure line and support line with RSI. The highest point of RSI has strong resistance and the lowest point has strong support. As an indicator of the strength of buyers and sellers, RSI value can still predict the price trend of foreign exchange market with high accuracy by analyzing its trend with pressure line and support line.

B.RSI support lines and trading opportunities

The RSI chart forms wave after wave with the exchange rate falling. When the three grooves are located on the same straight line, the direct connection line from the upper left to the lower right of the three grooves is the support line.

The original function of the support line is only to prevent the price from falling further when judging the price. Further discussion shows that the support line not only plays a supporting role, but also provides the best trading opportunity for the exchange rate.

1. When the new RSI value is higher than the RSI value of the third support point of the support line, it is a good time to buy.

2. Support point is an extremely important concept in foreign exchange investment. If it falls below this level, it will be like the fall of a strategic stronghold, which will have a vital impact on the success or failure in the future. It is precisely because of this that when it falls below the support point, it is also the time to sell.

It is worth noting that buying from this line or pressure line may not be found in a short time, and sometimes it may take months or even longer before a suitable point may appear. Remind investors of this, mainly to tell investors that analysis belongs to the category of statistical work. If there are no reliable data or charts, I would rather wait than be eager for quick success, lest it backfire.

C.RSI pressure line and trading opportunities

The RSI chart forms a peak, and as the exchange rate falls, one peak is lower than the other. When the three peaks are on the same straight line, the straight line connecting the three peaks from the upper left to the lower right is the pressure line. The pressure line is a sharp weapon to avoid risks. In fact, if we further explore, we can find that the pressure line not only has the function of avoiding risks, but also provides the best opportunity for exchange rate trading.

1. When the exchange rate cannot break through the pressure line, after a period of low consolidation, the exchange rate rises, and the new RSI value crosses the RSI value of the third peak of the pressure line, which is the buying opportunity of the exchange rate. The biggest disadvantage of this judgment is that you can't buy the lowest price.

2. After the pressure line is formed, regardless of whether the exchange rate rises or not, its RSI value is still lower than that of the third pressure point, indicating that the strength of bulls is worse than that of bears, and the market outlook will continue to fall for some time. This is the right time to sell.

D, RSI and long and short markets

Using RSI to judge the trading opportunity of long and short market: when the foreign exchange price just changes from short market to long market, RSI will obviously change from weak to strong; conversely, when the foreign exchange price just changes from long market to short market, RSI will obviously change from strong to weak.

1, the relationship between bull market and RSI

(1)RSI is obviously stronger.

(2) After the RSI becomes stronger, there are obviously more positive lines than negative lines in the K-line chart, and they are arranged in a centralized way.

(3) At the beginning of the rising stage, the trend of RSI is quite steep. When the rising market is about to turn back, the graph of RSI is parabolic and gradually tends to be smooth.

(4) In the bull market, even if the price has been sorted out, the RSI value rarely falls below 25.

2. The relationship between short market and RSI.

(1)RSI is obviously weakened.

(2) 2) After the RSI weakened, the number of negative lines on the K-line chart increased significantly compared with the number of positive lines, and they were arranged densely.

(3) When the bull market turns short, the falling angle of the RSI chart becomes steeper.

(4) In the short market, even if the price rebounds, its RSI value rarely exceeds 75.

(5) In the initial stage of short market, there will be a phenomenon that a peak is lower than a peak and a valley is lower than a valley on the RSI chart.

5. Evaluation of relative strength index

Relative strength indicators, like other technical indicators, are not perfect, and their advantages and disadvantages are obvious, specifically:

A. Advantages

1.RSI can show that the market is overbought and oversold, and the expected price will fall back at the top or bottom out.

2.RSI value can be used as an indicator to judge the strength of both long and short sides, and can judge the general trend of exchange rate market at any time.

3.RSI value can be used to judge the timing of exchange rate entry and exit with high accuracy.

B, shortcomings

The deviation of 1. is not necessarily reversed, and sometimes it is reversed after two or even three deviations, which should be considered comprehensively according to other indicators.

2. When the RSI value fluctuates between 40 and 60, it often belongs to the cowhide consolidation market. Sometimes when the RSI value breaks through the support line or pressure line, the price does not rise or fall obviously.

3. When the market fluctuates greatly and closes at the highest or lowest of the day, the RSI value is not enough to reflect the actual fluctuation of the market.

4. Confirmation of overbought area and oversold area: Whether the RSI value is over 70 or not, and whether it is over 30 or not depends on the length of the cycle. In special ups and downs, it is not surprising that the RSI value rises to 95 or falls to 5. Therefore, we must be very careful to identify overbought areas and oversold areas. Moreover, RSI values above 85 or below 15 are distorted and cannot reflect the truth of price fluctuation.

C. New development of C.RSI application

1.RSI graph can be bought and sold by trend line analysis, morphological analysis and the corresponding support points, resistance points and trend lines of traditional graphs.

2. Two RSI graphs with different periods can be compared, and the cross signal of the curves can be used as a reference for the entry point and exit point. If we compare the 9th with the RSI of 14, we can judge the buying point or selling point more accurately.

3. We can use the moving average of RSI value in a certain period of time and RSI value in that period of time on a certain day to observe the cross signal formed by these two values on the map as a reference for entering and leaving. In a word, although RSI has some shortcomings, it is still one of the important indicators as an auxiliary analysis tool. Investors can study the bullish and bearish atmosphere of the market according to RSI as a reference for buying and selling. The key to the correct use of RSI is that users need to have enough knowledge and understanding of the analyzed market.

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