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Malaysia Perspective| 15 June 2009
RSI – Probably The Most Misunderstood Indicator
By Shares Investment

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Extract Buy when it is “oversold” and sell when it is “overbought” – this is what most traders, investors and even some technical advisors would conclude when using relative strength index (RSI) in technical analysis. But is this the right approach when using the indicator? RSI is one of the most used technical indicators but probably the most misunderstood. Although the three main strengths of the RSI indicator are (i) determining overbought/oversold levels, (ii) discovering the positive or negative divergence against the price chart and (iii) centerline crossover, application on the first strength is normally used in a wrong manner! The first mistake ...
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