The Relative Strength Index technical indicator (RSI) is a price-following oscillator which ranges between 0 and 100. When Wilder introduced the Relative Strength Index, he recommended to use a 14-day RSI. From then on, the 9-day and 25-day Relative Strength Index indicators have also gained popularity.

A well-known method of analyzing the RSI is to search for a divergence in that the security is making a new high but the RSI is failing to exceed its previous high. This divergence is a sign of an impending reversal. If the Relative Strength Index then turns down and falls below its most recent trough, we are talking about a completed "failure swing". The failure swing is treated as a confirmation of the impending reversal.

There exist different ways to use Relative Strength Index for the chart analysis:

• Tops and bottoms: The RSI normally tops above 70 and bottoms below 30. It normally forms these tops and bottoms before the underlying price chart;
• Chart Formations: The RSI often forms chart patterns like head and shoulders or triangles which may or may not be visible on the price chart;
• Failure swing (Support or Resistance penetrations or breakouts): This is the situation when the RSI surpasses a previous high (peak) or falls below a recent low (trough);
• Support and Resistance Levels: The RSI Shows - sometimes more clearly than the market price itself - levels of support and resistance.
• Divergences: As discussed above, divergences develop if the price makes a new high or low which is not confirmed by a new high or low in the RSI. The market price normally corrects and moves in the direction of the RSI.

You can download the RSI indicator here: https://www.mql5.com/en/code/47

The first video shows you how to apply the RSI indicator on both Metatrader and JForex and what is the standard interpretation for the RSI.

Binary Options Trading with the RSI Indicator - Part 2

Binary Options Trading with the RSI Indicator - Part 3

Binary Options Trading with the RSI Indicator - Part 4