3 timeframes of RSIs: 6, 14 and 24 days. This is the extended version of the "standard" RSI script.
How to use it:
It has 3 upper bands and 3 lower bands. The 6-day RSI (orange line) corresponds to 80 and 20 bands, which means if 6-day RSI is over 80, it is an indicator of overbought for short term. Similarly, 14-day RSI use 70 and 30 bands and 24-day RSI use 60 and 40 bands. But these are not the "magic numbers". For different investments, they may have different thresholds. You can change it in the setting.
We all know when RSI is high, it may be an indicator to sell the investments we are holding. However, if 6-day RSI > 80, but 14-day RSI <70, it may not be the good time to sell it right now. We may watch it for a few days. But if all 3 RSIs are above the corresponding upper bands, it may be the time to sell it.
When the orange line down crosses the purple and blue lines, the price is dropping down. On the contrary, when the orange line up crosses the purple and blue lines, the price is probably up.
Let me know if you have any question.
Holly
2020.12.05
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules.You can favorite it to use it on a chart.
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Want to use this script on a chart?
FAQs
It has 3 upper bands and 3 lower bands. The 6-day RSI (orange line) corresponds to 80 and 20 bands, which means if 6-day RSI is over 80, it is an indicator of overbought for short term. Similarly, 14-day RSI use 70 and 30 bands and 24-day RSI use 60 and 40 bands.
What does an RSI of 14 mean? ›
The basic idea behind the RSI is to measure how quickly traders are bidding the price of the security up or down. The RSI plots this result on a scale of 0 to 100. Readings below 30 generally indicate that the stock is oversold, while readings above 70 indicate that it is overbought.
What is a good number for the RSI indicator? ›
RSI Indicator: Best Settings for Day Trading Strategies
- Short-term intraday traders (day trading) often use lower settings with periods in the range of 9-11.
- Medium-term swing traders frequently use the default period setting of 14.
- Longer-term position traders often set it at a higher period, in the range of 20-30.
What is the best indicator for RSI? ›
One technical indicator that can be used in conjunction with the RSI and helps confirm the validity of RSI indications is another widely-used momentum indicator, the moving average convergence divergence (MACD).
What RSI is too high? ›
The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30. Signals can be generated by looking for divergences and failure swings.
How to use the RSI indicator effectively? ›
The common levels to pay attention to when trading with the RSI are 70 and 30. An RSI of over 70 is considered overbought. When it is below 30 it is considered oversold. Trading based on RSI indicators is often the starting point when considering a trade, and many traders place alerts at the 70 and 30 marks.
What is a good RSI level to buy? ›
The relative strength index (RSI) provides short-term buy and sell signals. Low RSI levels (below 30) generate buy signals. High RSI levels (above 70) generate sell signals.
What is a healthy RSI? ›
What Is a Good RSI Indicator? Traders who are looking for investment opportunities should look for RSI values that hit 30 or fall below that level. This allows them to look for investment options that may be undervalued where the price may increase in the future.
Is oversold good or bad? ›
Oversold is mistakenly viewed by some traders as a buy signal. Instead, it is more of an alert. It lets traders know that an asset is trading in the lower portion of its recent price range or is trading at a lower fundamental ratio than it typically does. This doesn't mean the asset should be bought.
What is the perfect RSI settings? ›
While the default RSI setting is 14-periods, day traders may choose lower periods of between 6 and 9, so that more overbought and oversold signals are generated. Ideally, these levels should correspond with support and resistance levels.
Another way to avoid false signals is to use multiple time frames to analyze the chart patterns and trends. By looking at different time frames, you can gain more perspective and context on the price action, and identify the dominant trend and the minor fluctuations.
How accurate is RSI indicator? ›
One of the main risks of using RSI is its signals aren't always accurate. This is because RSI can't factor in events that influence a stock's price, such as economic news, earnings, and other fundamental aspects.
What is better than RSI? ›
Relative strength index was designed to measure the speed of price movements. The stochastic oscillator formula works best when the market is trading in consistent ranges. RSI is generally more useful in trending markets and stochastics are more useful in sideways or choppy markets.
What does RSI 6 12 24 mean? ›
The RSI is calculated as the ratio of the average value of the total price increase to the average value of the total price increase and decrease within a certain period of time. RSI1, RSI2, and RSI3 correspond to the 6th, 12th, and 24th respectively.
How to read adx? ›
The ADX identifies a strong trend when the ADX is over 25 and a weak trend when the ADX is below 20. Crossovers of the -DI and +DI lines can be used to generate trade signals. For example, if the +DI line crosses above the -DI line and the ADX is above 20, or ideally above 25, then that is a potential signal to buy.
What is the difference between RSI 6 12 and 24? ›
- RSI (6, 12, 24): RSI is above 70, which indicates overbought. Values: RSI (6) = 86.979, RSI (12) = 84.765, RSI (24) = 77.024. This may indicate a possible correction in the near future. - MACD: The difference between the MACD and the signal line is positive, which confirms the upward trend.
What is the difference between RSI 7 and RSI 14? ›
While the default RSI calculation uses a 14-period timeframe, traders can adjust the period to suit their preferences and strategies. Shorter timeframes, such as 9 or 7 periods, make the RSI more sensitive to price changes, generating more signals.
How to calculate RSI? ›
Calculating RSI values is a two-step process:
- RSI step one =100−[100/ 1+ Average loss / Average gain] This first formula turns the average gain or loss into a percentage. ...
- RSI step two =100−[ 100/ 1+ ((Previous Average Loss×13) + Current Loss)) /(Previous Average Gain×13) + Current Gain]