Price movement Vs RSI
Okay so I have not paid too much attention to this in the past but just how fast does the RSI reset itself after a run into overbought territory? Well here is a good example of a comparison that can help us understand that the RSI does not necessarily have to drop with the candles and vice versa.
The RSI went down a lot during a pretty flat area in price movement. So consolidation can also cause the RSI to go down over a period of time. The RSI drops much faster when the price drops but it isnt exclusively the only way that the RSI will drop. Consolidation can also cause this as well.
Case in point is the chart with this analysis. I drew 2 rectangles. They cover the same span of time yet the RSI dropped a considerable amount while the candles remained inside of a tight consolidation pattern for the most part. I am still learning things as I go and I thought this would be a good piece of info to share with you all.
I have long suspected this to be the case (consolidation can also cause the RSI to drop) I dont put too much weight on any single indicator alone but I do like to understand each and every indicator I use well. When the RSI gets high its considered "overbought" which is technically bearish. But I have seen the candles completely disregard the RSI and keep flying. Call it fomo or whatever you want but it happens. 2017 is a great example.
Like I said I dont put all my eggs in one basket and the RSI is simply a single indicator I use that I combine with a few others to get an idea of the market direction. I do appreciate the RSI but I would never depend on any single indicator alone. But then again WTFDIK
The RSI went down a lot during a pretty flat area in price movement. So consolidation can also cause the RSI to go down over a period of time. The RSI drops much faster when the price drops but it isnt exclusively the only way that the RSI will drop. Consolidation can also cause this as well.
Case in point is the chart with this analysis. I drew 2 rectangles. They cover the same span of time yet the RSI dropped a considerable amount while the candles remained inside of a tight consolidation pattern for the most part. I am still learning things as I go and I thought this would be a good piece of info to share with you all.
I have long suspected this to be the case (consolidation can also cause the RSI to drop) I dont put too much weight on any single indicator alone but I do like to understand each and every indicator I use well. When the RSI gets high its considered "overbought" which is technically bearish. But I have seen the candles completely disregard the RSI and keep flying. Call it fomo or whatever you want but it happens. 2017 is a great example.
Like I said I dont put all my eggs in one basket and the RSI is simply a single indicator I use that I combine with a few others to get an idea of the market direction. I do appreciate the RSI but I would never depend on any single indicator alone. But then again WTFDIK
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