How to Read Daily RSI Chart
  1. The Absolute RSI values for 3-, 5-, 7-, 10-, and 14- day periods are reported for the date shown.
  2. The Percentile value corresponding to that RSI value is reported for the indicated date.
  3. For reference, historical RSI values for each of the durations is shown for typical percentile values (5th to 95th).
FAQ's on Daily RSI Charts
 
1. What does RSI stand for and what is its significance?
RSI stands for Relative Strength Index which is a quantitative measure of the strength of the index/stock.
 
2. Why are RSI values shown for 3, 5, 7, 10, and 14 day periods?
RSI values for different day periods are given for investors to make decisions based on their preferences on risk appetite and trading duration.
 
3. What is the typical range of values for RSI?
RSI values range from 0 to 100. RSI (3) will show values at extreme ends as compared to RSI (14).
 
  1. Is it better to invest when RSI 3 is less than 30 or when RSI 14 is less than 30?
The probability of gains over a certain period of time is higher when RSI 14 is lower than 30 as compared to when RSI 3 is lower than 30. 
Also, the number of times when RSI 14 is less than 30 is much less than when RSI 3 is less than 30. This means that the number of opportunities to invest in a waning (going down) market is much less when RSI 14 is less than 30. These opportunities should not be missed.
 
  1. What is the significance of percentile values as shown in banner B above?
The percentile value is shown for the investor to get a perspective of how often has the market been at that absolute RSI level historically.
 
  1. Why is the 5th percentile value for RSI (3) at 13 and for RSI (14) at 35?
Since RSI tracks the relative strength index of security, it is very likely to get extremely high or low market conditions over a period of 3 days as compared to 14 days. Thus, RSI (14) at 35 represents a greater over-sold market condition as compared to RSI(3) at 35.
 
  1. What does the color scale in the chart represent?
The colors in the chart progressing from Red to Green represent Lower to Higher RSI.
 
  1. How can I use RSI values to trade securities?
You can use the percentile values as thresholds to trigger your trading activity and follow that schedule. As a conservative investor, it is prudent to start to invest money in the market at the 25th percentile values of RSI. If the market further drops down closer to the 5th to 10th percentile, use a dollar-cost averaging method to put more money into the security. Most importantly, remember to then patiently wait for the returns !!
 
Read more about RSI on public resources below:
Investopedia
Fidelity

© 2019 Evariation Investing

Evariation Investing is not a registered investment advisor, tax advisor, legal advisor, or financial broker. All investment and financial opinions expressed are from the personal research and experience of the owner of the site and are intended as educational material. Occasional unintentional errors may occur. It is very important that you do your own analysis or consult with a financial advisor for your personal situation.

  • White Instagram Icon
  • Twitter Clean