BlackPeter....Even IC charts using crappy Yahoo data shows the RSI around 35.5
I'm looking at ANZ securities supercharts now and I see the RSI oscillator is far too volatile to be the standard RSI (Wilder) type..Wilder designed RSI to smooth out the often false over-reaction of oscillating signals. I've checked the Momentum oscillator which is a more volatile form of oscillator but it doesn't match up either..so I have no idea what type of oscillator the ANZ securities is using...
Personally I don't use ANZ securities supercharts as it's too limiting, the Adjusted tick box doesn't seem to work at all for me since NZX data went to S&P..I have told them about their supercharts being too basic to be of much use..but they don't seem to treat charts seriously..brokers and squiggly lines don't mix well...eh:D
BlackPeter ..your equation has not factored in the exponential moving averages of the up closing prices with the exponential moving averages of the down closing prices ...using those smoothing factors makes it nearly impossible to get down to a zero result..Ive seen a few 5's over the decade but that is unusual, normally a low RSI gets to about 20 ..when it does get to say 5 its a result of a sharp price drop losing about 30% within an continuous falling price trend period (without a sucker rally) ... As an example IQE at the end of Nov 2015 with a sharp fall from $1.30 to $0.40 resulting in a RSI falling to 9.5... this RSI was flattering (high) because the fall came after a sucker rally...The latest IQE disaster saw the RSI reach 13.5...
Many investors misuse oscillators of which RSI is one..Just thinking and interpreting overbought oversold could land one into mistiming a trade..
When interpreting and using RSI TA investors have to first determine which RSI interpretation method to use...by asking these 2 questions...
1...is SUM in a trend and how strong is the trend?
or
2...is SUM showing a ranging behaviour?,,(trendless)
Answer:..Currently SUM is trending so use the trending interpretation method as outlined below from IC
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From Incredible Chart education webpage
Trending Markets
Only take signals in the direction of the trend.
- Go long, in an up-trend, when RSI falls below 40 and rises back above it.
- Go short, in a down-trend, when RSI rises above 60 and falls back below it.
Exit using a trend indicator.
Take profits on
divergences. Unless confirmed by a trend indicator, Relative Strength Index divergences are not strong enough signals to trade in a trending market.
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RSI is useful in Stocks that are behaving in a rectangle pattern (trading range/range bound/trendless) Most indicators become unreliable during trendless periods and could send false signals..Oscillators (RSI is an Oscillator) are more reliable indicators during trendless periods and these should be used in charting at these times..
During trending times (SUM is trending) there are other indicators better suited to use than RSI
SUM has been and still is a great buy and hold stock thanks to its long term bull cycle status...It has and is a must have stock in one's portfolio...If investors just forgot about getting into "cheap" market unfriendly stocks and blaming everyone except themselves when those stocks misbehave and instead invested long term on the steady friendly risers they would be so much better off....
Hint: invest in stocks that have long term charts with the price starting at the bottom left hand corner and ending at the top right hand corner.....simple!!! ......
.see my today's SUM Chart post here