Saturday, 12 May 2018

RSI Levels between 30 and 70, 50 and 100, 30 and 50, 70 and 100 & below 30

RSI Between 30 and 70:

Market or share is seen range bound situation, stuck in a range between important averages or fixed levels, and the RSI oscillates between 30 and 70. When a share of a market is stuck between two major averages, it remains in a range for a while before giving a breakout on either side.

When to Buy?

  • Buy, when RSI after going below 30 levels, manages to give a positive breakout above 30 levels. As soon as it crosses 30 on the upside, one can initiate a buy.
  • One can also buy when RSI takes support at 30 and starts climbing up.

When to Sell?

  • Sell, When RSI breaks below 70, after retracing from above 70 levels. Or one can sell after RSI touches 70, faces resistance there and starts declining.
  • It is always better to wait for confirmations. In doing so trader can sell one day late, but chances of whipsaw are reduced.
  • In weekly charts, when RSI is at 50 levels, and at the same time, the stock get stuck between two major averages, it can remain range bound for a longtime.
  • As long as this range remains intact, one can buy and sell when RSI bottoms out near 30 and Tops out near 70.
  • In daily charts when RSI stagnates near 50, trader don’t get any range to range to trade, so one must stay away from such stock or market.

RSI between 50 and 100:

When market enters overall, bull phase, mostly RSI is seen oscillating between 50 and 100 for many days consistently, in daily time frame. In weekly and monthly it keeps above 50 and 70 levels respectively.

When to Buy?

  • On daily frame whenever RSI takes support on 50 levels, it gives chance to buy.
  • When RSI goes above 70, momentum gains more strength.
  • As long as RSI keeps in the range, bullish phase remains intact.
  • As long as weekly RSI is above 50, and Monthly RSI is above 70 in daily time frame RSI mostly oscillates between 50 and 70, with every few exceptions, when during a wild gyration, it may break below 50 for brief period and swiftly move above 50 to remain above it once again.

When to Sell?

  • From above 70, when it breaks 70 on downwards move, one can sell for short time.
  • Selling from higher levels can be a bit risky, as during this phase, declines are very little and mostly for a short period. So one must focus on buying on declines more.

RSI between 30 and 50:

  • When RSI breaks 50 in daily chart and remains below 50 and oscillates between 50 and 30, it must be understand that bear phase has been established for some time, so one has to sell on every rise.
  • When such trend is established, it is seen that that RSI is below 50 in weekly charts.
  • If RSI goes below 50 in monthly charts, then long term bear phase is established.

When to Buy?

  • When RSI takes support at 30 levels, or rises from below 30 crossing it upwards, one can go long for short time.
  • In buying there is some risk, as the downtrend below 30 RSI levels can extend for long period.

When to Sell?

  • When RSI rises from 30 levels to 50, it faces resistance near it, so one must be ready to sell.
  • Best use can be to sell every time RSI faces resistance near 50.

RSI below 30:

In a ranging market, when RSI goes below, it must be understood that soon trader may get a buying chance.

When to Buy?

  • In ranging market, RSI goes below 30 or takes support at 30, it gives the chance to buy.
  • But in trending market, one must not make haste and try to buy the bottoms, as RSI can remain below 30 levels for a longer period. In such scenario, trader don’t get chance to exit on rise, and we can get stuck in a position for long time trying to pick bottom.
  • That is why unless the momentum of downtrend doesn’t fizzle out, and RSI after rising above 30, doesn’t take support on 30, one must not initiate to buy.
  • When RSI remains below 30, bottoms can be established at a lot lower level than our expectation.
  • Never plunge thinking that the stock is available cheap.
  • A stock once at 1000Rs can look cheap, and in bear phase same stock when available at 150, can look expensive. So never get blinded with such illusions.
  • Trader must never buy and sell based on such illusions.

RSI between 70 and 100:

In a ranging market when RSI, crosses 70, it must be understood that soon trader may get a selling chance.

When to Buy?

  • In ranging markets, When RSI crosses 70 or faces resistance near 70 one has to sell.
  • But in trending markets, When RSI crosses above 70, the momentum of up move becomes stronger, and one side sharp up move can be witnessed.
  • Trader must not sell prematurely in such circumstances.
  • As long as RSI doesn’t go below 70 and faces resistances of 70 again, one can keep long.
  • In weekly charts RSI is generally above 70. In monthly charts it is above 70 too.
  • One can keep long as long as RSI keeps taking support on 70.

When to Sell?

After saying above 70 levels for long time, when RSI breaks below 70 levels, on must sell taking into consideration all other indicator signals.

No comments:

Post a Comment