 Hey everyone, it's Emmanuel here and in this video. I'm going to go over the RSI indicator Now the RSI indicator is basically going to be one of the most popular indicators you run across in trading Right up there with the likes of our stochastics moving averages and so on it's typically used to identify Overbought and oversold conditions in the market now when the market goes below the 30 line We would say the market is oversold and when it crosses above and goes past the 70 line We would say the market is overbought and just like the stochastic We use it to pick potential tops and bottoms in the market and we have a couple of examples on the chart We're looking at right now right here. We can see price crosses below the 30 Signifying that the markets oversold the market bottoms out and the rally begins Some traders might drop down one or two time compressions looking to get a better entry Decreasing their risk and trying to maximize reward and at this point, they'll be looking for different entry methods Such as the double bottom Triple bottom moving average crosses and candlestick formations all in a bid to time a reversal after the RSI has given an Overbought or oversold signal on a higher time frame and here's an example of a bearish setup with the indicator going over bought and Thereafter price topped out for a good bearish move Now before you run away to your charts trying to trade this as a strategy It's very important to understand exactly what the RSI is and what it's made to do RSI stands for relative strength index and it's a basic measure of how well the currents appearing It's performing against itself by basically comparing the strength of the bullish days against the bearish days So what we have here is an indicator that gives us clues or hints in regards to strength And if you should go to your chart and start trading every cross of the RSI Pass the overbought and oversold levels and you find out very quickly that that's not going to serve you very well What you perhaps want to do is learn to read your charts and find out how to spot the Locations where you should be looking to plot your entries and you can do this by watching our weekly analysis on YouTube where we discuss why we are looking at a particular level or Attend the ultimate supply and demand forex webinar where we teach you how to find the best possible locations For supply and demand levels right here on this chart is a couple of trade setups That wouldn't have worked out if you've traded the RSI crosses as your entry signals We can see that oversold level was crossed right at this location On this particular candle in the market, but yet it continues to go lower for quite a while And again another signal at this point only gave us a little rally Which might not even be enough for you to make your profits That is if you're following good risk reward ratios It wasn't until this point with the market moving even lower past the previous levels that the indicator was telling you was Oversold the price finally gives you a double button and rallies remember all the RSI does is show us Potential turning points in the market by comparing how much sellers are in the market compared to the buyers So it's clear to see exactly why the market might be showing Oversold at this locations after consecutive bearish candles It doesn't give you a definitive point or level where the price would choose to turn around from that In fact is a question of how well you pick the levels you trade off So what I would like you to do is look at the chart right now Look at how the RSI crosses from oversold to overbought when there are very few bearish candles in its way upwards and compare that to how price struggles to go oversold or Overbought when the strength between the bears and the bulls are more balanced The rationale behind it is that price should want to pull back or give a bearish move If the climb is too vertical and as we know price can't go up forever It has to pull back find some buyers before continuing and while this raise your probability of price Moving lower at a sub par level It will not help you when the trend is very strong and pricing just blow past it before giving you any Significant pullbacks recently more traders are trading the RSI indicator in perhaps a manner that suits What it was intended for in the first place the indicator was designed to show you strength and traders who understand this Use it to confirm trend formations and let's look for some examples on the chart The rules are rather simple if you're looking for a possible uptrend Then make sure the RSI is above the 50 and if you're looking for a possible downtrend Make sure the RSI is below 50 right here with this move up We can see the RSI crosses the 50 line by the close of this candle This signifies a good strength that might be going counter the downtrend that was previously going on Now, of course, you don't just jump in the market and stop buying immediately What you might want to do is wait for a structure to be broken in the form of lower highs taken out Wait for a pullback and jump in the market with confidence that you're in a pretty strong trend as the RSI remains Over the 50 level. Well, that's it from me and I do hope you found this video helpful If you need any more help, please don't hesitate to contact us and we'll get back to you as soon as possible In the near future, I'll be going over other ways to trade the RSI indicator Such as trading the RSI divergence and hidden divergence. Have a great day and take care