How To Use The Relative Strength Index (RSI)
Welles Wilder first unveiled the Relative Strength Index in the 1970s as a way to measure price momentum for commodities. Connie Brown and Andrew Cardwell enhanced the use of this technical indicator by focusing on momentum divergences as well as the bullish and bearish phases of RSI. Today we'll break down the chart of the S&P 500 index using all of the above!
Wilder's book on RSI: amzn.to/3YiQSIJ
Brown's book on technical indicators: amzn.to/3Yd93zw
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Dave helps active investors and financial advisors make more informed investment decisions, inject more discipline into their investment process, and enrich relationships with their clients. Feel better about making better decisions!
Dave is the Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is a frequent host on StockCharts TV, and he relates mindfulness techniques to investor decision making in his blog, The Mindful Investor.
He's also President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research and consulting firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.
Dave was previously a Managing Director of Research for Fidelity Investments in Boston, a Past President of the Chartered Market Technician (CMT) Association, and started in the financial industry just after the March 2000 market top at Bloomberg in New York.
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Пікірлер: 44
"Overbought means up a lot." Never heard it put quite that way before - very well put! In my own investing journey my use of RSI has not been particularly well developed - mainly have historically looked at it in terms of overbought/oversold. More recently I've begun using it to identify divergences between price and momentum and this has been very helpful - especially in conjunction with MACD and over a range of timeframes. I never did notice the late 2021 divergence you mentioned here in the SPX, so clearly I need to work this into my process! Very much appreciate your thoughtful perspective as always Dave. 👍
@DKellerCMT
Жыл бұрын
Thanks for the kind comments Charlie- glad you found this one helpful! D
Ive watched many vids on rsi and this is the first to simply explain why the indicator is doing what it’s doing instead of just what to do when it happens. Thanks so much for explaining this in detail and making it simple to understand! Gained a new subscriber
@DKellerCMT
Ай бұрын
Really appreciate the kind words! D
Wilder would be proud of this awesome break down of his indicator, R.I.P j.Welles wilder
@DKellerCMT
Жыл бұрын
Thanks for the kind words! D
Excellent video - you explain it very well thank you Dave 🙏🏼
@DKellerCMT
Жыл бұрын
Thanks for the feedback! D
This video is terrific. Picked up some great nuggets, thank you.
@DKellerCMT
Жыл бұрын
Glad you enjoyed! D
Thanks Dave. I use RSI and MACD, mostly because I have watched a lot of Mary Ellen McGonagle's videos.
@DKellerCMT
Жыл бұрын
Mary Ellen knows her stuff! D
Thanks, David! Very helpful!
@DKellerCMT
Жыл бұрын
Cheers and thanks for watching! D
Excellent video, thank you for the quality content.
@DKellerCMT
Жыл бұрын
Appreciate the watch! D
Another good lesson. Thank You Dave
@DKellerCMT
Жыл бұрын
Absolutely and thanks for watching! D
Very good! Thank you....I like the 40 level principle
@DKellerCMT
Жыл бұрын
Total game changer for me when I started thinking of RSI this way... D
Thank you Dave.
@DKellerCMT
Жыл бұрын
Cheers and thanks for watching! D
Thank you!
@DKellerCMT
3 ай бұрын
Cheers and thanks for watching! D
Nice job
@DKellerCMT
Жыл бұрын
Very much appreciated John D
Thanks Dave. Can please make a video regarding entry and stop loss specially how you enter and exit a trade.
@DKellerCMT
Жыл бұрын
Added to the list and will do! D
RSI is a great indicator
@DKellerCMT
Жыл бұрын
It is on most charts I review, for good reason! D
Thanks for the video. When/how is RSI divergence negated?
@DKellerCMT
Жыл бұрын
Great question Tony. Easiest way to negate this sort of signal is the price makes a subsequent high on higher momentum, thus no more divergence. Will do a video on this at some point! D
Thank you Dave for the video, I have rookie question, is RSI only useful for daily chart? Thx
@DKellerCMT
Жыл бұрын
Good question and no- RSI actually applicable to longer time frames- weekly, monthly and intraday like 5-minute charts.
How much of the upcoming pullback is due to the Fed's actions?
@pezzodipunto2239
Жыл бұрын
Well intended advice (which may disagree with of course): try not to get too distracted by narratives, watch the tape.
@DKellerCMT
Жыл бұрын
That is a source of great debate always! "The why is always crystal clear in the rearview mirror." D
How much money can you gain for a week? There are some kind of limits or not?
@DKellerCMT
7 ай бұрын
With any indicator/system/plan, how much money you can gain depends on how much money you are risking. Greater potential reward comes with greater potential risk! D
in my opinion rsi, macd tell you nothing you cannot see by reading pure price action
@DKellerCMT
Жыл бұрын
I have known people who say the same thing and I get the argument! I would say that something like RSI makes it super easy to rank a list of any stocks/ETFs by momentum, so there's value there! D
@martyjames6204
Жыл бұрын
@@DKellerCMT sure, but easier to rank by c/c(5 days ago) etc using amibroker / realtest etc and way more effective imo. cheers
@TradersLessons
8 ай бұрын
I think they are great, but need to be combined with other indicators.