Relative Strength Index (RSI) and the Average Directional Index (ADX) Made Simple
Using the RSI and ADX Indicators. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! The RSI indicator or Relative Strength Index is similar to the stochastic in the sense that it can signal overbought and oversold areas in the markets. Relative Strength Index (RSI) charts can be used to identify when a trade could be entered in a volatile market environment. Normally, an asset with with an RSI of more than 70, on a scale of 0--100, is seen as overbought, whereas a level of less than 30 is seen as oversold. An RSI of 50 is neutral.
Unlike the stochastic that usually has two lines the RSI only has one main line and another difference is that the stochastic would signal overbought over 80 and oversold under 20 while the RSI signals overbought over 70 and oversold under 30. I prefer the Relative Strength Index indicator over the Stochastic and find it more reliable.
The ADX is a similar indicator to bollinger bands in that it can show us the volatility of the markets. Generally, ADX is used as a confirmation if price is trending or ranging.