The Technical Analysis Forex Indicator, RSI (Relative Strength Index), compares the magnitude of recent wins with recent losses to determine conditions of OB/OS in the Forex market.
How to add the Forex Indicator RSI on Metatrader 4
The parameters for this indicator are.
We generally use 14 periods and the levels of 30 and 70
When the indicator is above the level of 70, we say that the pair is in Overbought (OB). When it is below the level of 30, we say that the pair is in OverSold (OS).
In this graph we can see two entry points (yellow area) when the indicator was close to the level 30 (OS), so we will take Long positions. The other entry point is close to the level 70 (yellow area) and we
The blue areas tell us that the price is breaking the 50 level, and that may indicate short positions (if it breaks downwards) or long positions (if it breaks upwards.