RSI

Question 1

Failure Swings (bullish)

Answer 1

A bullish failure swing forms when RSI moves below 30 (oversold), bounces above 30, pulls back, holds above 30 and then breaks its prior high

Question 2

Failure Swings (bearish)

Answer 2

A bearish failure swing forms when RSI moves above 70, pulls back, bounces, fails to exceed 70 and then breaks its prior low

Question 3

RSI

Answer 3

• RSI = 100 - (100 / (1 + RS)) RS = Average Gain / Average Loss
• RS = Average Gain / Average Loss

Question 4

RSI UPS and DOWNS smoothed

Answer 4

• UPS_{day i} = [(UPS_{dayi - 1} * 13) + Gain_{day i}] / 14
• DOWNS_{day i} = [DOWNS_{dayi - 1} * 13) + Loss_{day i}] / 14

Question 5

Overbought

Answer 5

Over 70

Question 6

Oversold

Answer 6

Below 30

Question 7

Bull market range

Answer 7

RSI tends to fluctuate between 40 and 90 in a bull market (uptrend) with the 40-50 zones acting as support

Question 8

Bear market range

Answer 8

RSI tends to fluctuate between 10 and 60 in a bear market (downtrend) with the 50-60 zone acting as resistance

Question 9

Positive reversal

Answer 9

A positive reversal forms when RSI forges a lower low and the security forms a higher low

Question 10

Negative reversal

Answer 10

A negative reversal forms when RSI forges a higher high, and the security forms a lower high

Question 11

First averages

Answer 11

First Average Gain = Sum of Gains over the past 14 periods / 14 First Average Loss = Sum of Losses over the past 14 periods / 14

Question 12

Averages

Answer 12

Average Gain = [(previous Average Gain) x 13 + current Gain] / 14 Average Loss = [(previous Average Loss) x 13 + current Loss] / 14

Question 13

Divergence (bullish)

Answer 13

A bullish divergence occurs when the underlying security makes a lower low and RSI forms a higher low

Question 14

Divergence (bearish)

Answer 14

A bearish divergence forms when the security records a higher high and RSI forms a lower high