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Howto use RSI for the upcoming week

RSI is an indicator for overbought and oversold signal. To cut things short, above 70 is oversold and below 30 is overbought. But itself alone can never be used as a buy and sell signal.

Oversold can be more oversold and overbought can be even more overbought. What’s more this is derived by price movement and hence it is a slow indicator. It means you might be trading quite far away from support or resistance.

But by combining it with candstick and SAR (support and resistance), wining probability will be higher. Divergence signal can also be found as well as chart patterns such as Head and Shoulder. Currently, quite a few counter is showing a good counter-trend opportunity.

Personally, I don’t use RSI to trade but using it to scan for majority of stock with the overbought bearish indicator. When a lot of counters showing same indicator, it will signal to me to tighten my stop and perhaps to take small profit.

Almost all the sector is showing overbought with bearish candlestick as well as bearish divergence.  Marine is very very far away from home (20 day moving average) and hence this sector will be a good target to aim for.

– The Trader –

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