{"id":37803,"date":"2013-04-24T19:43:25","date_gmt":"2013-04-24T23:43:25","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37803"},"modified":"2013-04-24T19:43:25","modified_gmt":"2013-04-24T23:43:25","slug":"video-top-3-technical-tools-part-2-relative-strength-index-rsi","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/24\/video-top-3-technical-tools-part-2-relative-strength-index-rsi\/","title":{"rendered":"(Video) Top 3 Technical Tools Part 2: Relative Strength Index (RSI)"},"content":{"rendered":"

EWI senior analyst Jeffrey Kennedy shows you how to identify quality trade setups with supporting technical indicators. <\/span><\/p>\n

By Elliott Wave International<\/span><\/h3>\n

“There are many different forms of technical analysis. A completed Elliott wave pattern supported by additional evidence allows for more confident forecasts and higher probability trades.”<\/em><\/p>\n

-Jeffrey Kennedy<\/p>\n<\/blockquote>\n

Trader and technical analyst Jeffrey Kennedy has more than 25 years of experience using with the Elliott Wave Principle. To support his Elliott wave analysis, Jeffrey says that his 3 favorite technical tools are Relative Strength Index (RSI), MACD, and Japanese candlesticks.<\/p>\n

This 3-part series includes Jeffrey’s practical lessons and proven techniques to support his wave counts (read Part 1 here >><\/a><\/span>). Today’s video clip shows you how RSI and range rules can help identify trading opportunities: Part 3 will cover MACD.<\/p>\n

Jeffrey’s second lesson, excerpted from his Elliott Wave Junctures<\/em><\/a><\/span> educational service, gives an overview of RSI followed by a video example.<\/p>\n

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Buying pullbacks in uptrends and selling bounces in downtrends are great ways to trade trending markets.<\/em><\/p>\n

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Developed by J. Welles Wilder, Jr. and presented in his 1978 book, “New Concepts in Technical Trading Systems,” RSI measures the strength of a trading vehicle by monitoring changes in closing prices and is considered a leading or coincident indicator. Andrew Cardwell popularized RSI as a trading tool by introducing the concept of range rules.<\/em><\/p>\n

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The theory behind range rules is that countertrend price action in trending markets has specific momentum signatures. RSI, for example will find support within roughly the 50-40 region when pullbacks in uptrends occur. Conversely, when bounces develop in downtrends, RSI will meet resistance in the 50-60 area.<\/em><\/p>\n

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Taking the path of least resistance is a benefit of trading in the direction of the trend. Moreover, the use of RSI and application of Andrew Cardwell’s range rules help identify when a trader can rejoin the trend.<\/em><\/p>\n

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