How to Add & Use RSI Indicator in TradingView

You can use various indicators in TradingView to create the right trading strategy for intraday or positional-based long-term investment. There are various technical indicators but you can use the best indicators in TradingView that are most popular and effective in terms of giving the right signal. RSI is one of the best indicators in TradingView. Today we are going to discuss how to add, use, and rest RSI indicators with the right strategy in TradingView.

RSI Divergence Indicator TradingView

Relative Strength Index (RSI) is one of the best momentum-based oscillators used to measure the speed (velocity) as well as the change (magnitude) of directional price movements in the stock or market index. Along with giving the visual strength and weakness of the market, it also shows whether the stock price or market index is trading in an overbought or oversold zone.

In TradingView, RSI is one of the most popular technical indicators used by traders for technical analysis. RSI oscillates between zero and 100 and when RSI Indicator is above 70,it is considered in the overbought zone and when RSI Indicator is trailing below 30 it means the stock is oversold. It is directly proportional to the price, which means when RSI increases the price also increases, while when RSI decreases, it indicates the price of a stock also decreases.

How to Add RSI Indicator in TradingView?

Just like other indicators adding RSI in the TradingView is easier. However, while adding theRSI or any other indicator TradingView might ask you to subscribe to the paid version. For limited use of TradingView and its functions, you can create an account with your registered email id and log in with the same details and follow the steps given below.

Best RSI Indicator Settings in TradingView

As we have already told you the default setting of the RSI indicator is 14 days closing price of the stock or the market index with a simple moving average of 14 days and Bollinger band standard deviation of 2 to show the best indication on the TradingView chart.

However, you can change the parameters and other settings in the RSI indicator as per your trading strategy and investment criteria. You can choose the longer period instead of the 14 days to see the long-term outlook of the price movement. You can also use the shorter period date to see the price movement of the stock or market index for recent days.

For medium to swing trading, you can set and use the RSI settings at 14 days period, while for short-term or intraday trading you should choose the 9-11 days period to get a better indication. However, if you want to use the RSI to pick the stock for the long-term investment, you need to set the period at a higher range be around 20-30 days.

Best RSI Strategy in TradingView

Whatever the settings you choose while applying the RSI indicators the main motive should be to make your trading strategy successful and profitable. Hence, you need to apply the best RSI strategy TradingViewto know the trend more precisely.

The simple and by default RSI strategy in TradingView is to choose the length period for 14 days and set the overselling level at 30 and the overbought level at 70. Whereas an RSI between 30 and 70 is considered the neutral and an RSI trailing around 50 indicates that is no clear trend or stock is trading in the range bound trajectory with no significant movement.

When RSI swings between these levels you can take the decisions to create the long and short positions in the stock or market index. You can simply create the buy and sell strategy when the RSI is below 30 and above 70 levels respectively. However, you can use other top best technical indicators to confirm the trend and make the right decisions for trading.

RSI Divergence in TradingView

The RSI also works as a divergence indicator in TradingView that you can use in your trading strategy. The RSI divergence happens when there is a difference between what the price action is indicating and what the RSI is indicating. You can interpret these differences as an upcoming reversal in the current trend in the stock price or market index.

In RSI divergence in TradingView, there are two types of divergences, bearish and bullish. A bullish RSI Divergence is considered when the price makes a new low but the RSI makes a higher low.Bearish RSI divergence happens when the price makes a new high but RSI makes a lower high. When you use these divergences, a bullish divergence creates a buying opportunity, while a bearish divergence creates a selling opportunity for the traders.

RSI for Uptrend or Downtrend in TradingView

You can use RSI to confirm the trends in the underlying assets. The RSI indicator tool cannot used for trend reversal but can be also used to confirm the uptrend or downtrend. As per the experts, a bullish divergence happens only in a bearish trend and a bearish divergence occurs only in a bullish trend.

However, according to the TradingView experts both these divergences, typically cause a short-term correction and not an actual trend reversal.Hence, you can use the divergences as a trend confirmation, and not necessarily consider it for the trend reversal.