Use RSI Wave To Capture Buy Points Skillfully

The relative strength index (RSI) is to analyze the intention and strength of market buying and selling by comparing the average closing price and average closing price in a period of time, so as to determine the future market trend.

1. by the restriction of the formula, the value of the strength index is between 0 and 100, no matter how the price changes.

2. the strength and weakness index is higher than 50, which means a strong market, whereas the below 50 indicates a strong market.

3. strong and weak indicators fluctuate between 70 and 30.

When the 6 day index rises to 80, it means that the stock market has overbought phenomenon. If it continues to rise, over 90, it means that it has reached the heavily overbought alert area, and the share price has formed its head, which is likely to reverse in the short term.

4. when the 6 day strength index dropped to 20, it indicated that the stock market was oversold. If it continued to fall below 10, it indicated that it had reached a serious oversold area, and the stock price might have a chance of a rebound.

Deviating from the RSI index is of great reference value for forecasting the market, and it may not play a significant role in stocks.

But if we want to use this index to capture the best pointcut, we should talk about its fluctuation area.

According to our experience for many years, the RSI index value falls below 20 on the 6 day. It often has short term opportunities.

(600839) since 1999, the "5. 19" market continued to fall after the summit, but 6 RSI fell to below 20 every day, which led to a rebound. There are many similar situations in August 16, 1999, December 9th, May 15, 2000, July 4th, December 18th, and this year.

Even if the rebound is not large, intervention profit is not large, but at least at this point, we can recover a little loss and not cut off the floor price.

There are two points that need to be highlighted here: first, if the 6 day RSI falls below 20, there has not been a slight rebound in the market, and at that time, it was in a downward spiral.

For example, in July 17th this year, Sichuan Changhong once fell to less than 20 on the 6 day of RSI, but there was no sharp rebound, and then a sharp fall.

Environmental protection shares (0730) did not rebound slightly during the period from September 20, 2000 to September 29th, and there was also a sharp fall from October 9th to 17.

Two, if 6 days RSI several days linger below 20 not.

Finally, it is emphasized that although the use of RSI indicators can reduce losses, RSI can only serve as a warning signal. It does not mean that the market will continue to develop in this direction. Especially when the market is shaking violently, we should make a comprehensive analysis based on other indicators. We can not simply rely on the signals of RSI to make trading decisions.