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#43 – Trading Tip of the Week

By On October 22, 2012 - 10:00 AM · Leave a Comment · In howtotrade.pricegroup.com

Using the Relative Strength Index (RSI) as an overbought/oversold indicator — As an OB/OS indicator, a 9-day RSI value approaching 80 means that the market is overbought, i.e., the price is very high and almost everyone interested in this contract has already taken a position so that there are very few traders left to maintain buying pressure to push the price higher. There is also the possibility that because the price is so high, weak longs will begin to get out of the market. While the indicator by itself is not enough to trigger an automatic sell signal, it is a warning to be alert for any hint that long liquidation selling is beginning.

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