⭐ *How to plot RSI:*
✅ RSI is usually drawn as a separate line chart, usually *below the price chart,* to maintain the same time scale.
✅ In your trading platform, go to *“Charts”, then to “Studies” and choose RSI from the available options.* The default set-up of RSI in most of the trading platforms will show the period as 14.
✅ Overbought level as 70 and oversold level as 30. Let us retain the period as 14 but change the overbought level as 80 and oversold level as 20.
📝 *Trend Direction:*
💫 *_“Trend is your friend”_* is the golden rule of technical analysis. Traders are supposed to trade in the direction of the market trend only. RSI is much *useful in determining the trend.*
✔️ For instance, RSI is usually moving between 40 and 80 and rarely falls below 40 in the case of a stock in strong uptrend. In such cases of stocks in uptrend, one is not supposed to go short. The stock may be bought at the RSI value of 40 and covered by selling when the RSI value reaches the value 80. Stocks in strong downtrend will be mostly moving between 20 and 60, and one can consider going short if and when the RSI touches the value 60.