There are three RSI indicators, in which RSI 1 represents the relative strength on the 6th, RSI2 represents the relative strength on the 2nd, and RSI3 represents the relative strength on the 24th. Generally speaking, RSI takes 50 as the center line, above 50 is a long market, and below 50 is a short market.
RSI index is familiar to small and medium investors and is an effective analysis tool. This paper summarizes the characteristics of RSI index when the master is at the bottom of the market. Give investors a medium-term bottom grasp to help.
Five elements of RSI:
1, value. RSI greater than 50 is a strong market, and more than 80 enter the overbought area, which is easy to form a short-term retracement; Below 50 is a weak market, and below 20 enters the oversold area, which is easy to form a short-term rebound.
2. Cross. There are generally two kinds of RSI: long-term and short-term. Short-term is a long market above long-term and vice versa. When the short-term RSI is in the oversold area below 20 and crosses the long-term RSI from bottom to top, it is a buy signal. When the short-term RSI is in the overbought area above 80 and the long-term RSI crosses from top to bottom, it is a sell signal.
3. Form. RSI index, like price curve, can be used for morphological analysis. Such as double top, double bottom, head and shoulder bottom, triple bottom, etc. Combined with whether these patterns appear in overbought areas or oversold areas, we can distinguish short markets from long markets.
4. Deviation. When the price is getting lower and lower, but the RSI is getting higher and higher, it is easy to reverse the price. When the price is higher than the wave, but the RSI is lower than the wave, it is easy to reverse the price as the top deviation.
5. Trend line. You can also draw a trend line on the RSI indicator chart. If RSI falls below the trend line, it is a sell signal. If supported, it is a buy signal. Trend line analysis has a good effect in short-term trading, while the middle line has a poor effect because of its high sensitivity.
RSI judges the key points at the bottom:
1, after the market plunged, it fell continuously, hitting a new low step by step.
2. The decline rate is higher than about 40%, and the deeper the better, the return to the starting position of the last bull market or rebound market.
3. The longer the decline time, the better, preferably more than 2 1 week.
If the above three points are met, when the weekly RSI value is less than 15, we can resolutely intervene and basically confirm that it is not far from the bottom of the bull market.
In the integrated market:
The overbought position is defined as 70 and the overbought position is defined as 30.
1) When RSI falls below 30 and crosses 30, do more. Or RSI falls below 30 to go long, and then a bull runs backwards.
RSI rose above 70, and then went short when it fell to 70. Or RSI rises above 70 to short, and then a bear runs backwards.
The fault wing of RSI (see attachment) can be used as a confirmation signal.
In the trend market:
You can only trade in the direction of the main trend.
1) In the main upward trend, RSI is long when it falls below 40 and then crosses 40.
2) In the main trend of decline, RSI rises above 60, and then goes short when it crosses 60.
Matters needing attention in using RSI indicators:
(1) The distinction and definition of overbought areas and oversold areas should be based on specific market conditions.
Generally, RSI values above 80 can be identified as overbought areas, and below 20 can be identified as overbought areas. However, in the special ups and downs, the division between the oversold area and the overbought area of RSI depends on the specific situation.
For example, in a bull market or for bull stocks, the overbought area can be above 90, and in a bear market or for bear stocks, the overbought area can be below 10 (this is relative to the RSI with small parameter setting. If the parameter setting is large, it is difficult for RSI to reach above 90 or below 10).
(2) As an investor, when applying RSI indicators, we should always observe the details of changes in trading volume:
1. When the RSI indicator shows the buying signal, if the trading volume becomes scarce, it usually indicates that the stock is about to complete the bottoming process, and investors can consider actively intervening.
2. When the stock has bottomed out and investors intervene in time, if there is no process of effective volume increase, it is said that the fundamentals have not bottomed out and need to be treated as a short-term rebound.
There is no market that only rises and does not fall, and there is no market that only falls and does not rise.
Know yourself and know yourself, and you will win every battle. Understanding the most classic RSI bargain-hunting technology is likely to lead to a mid-term increase in bargain-hunting.