Wednesday, 07 August 2019
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The Relative strength index – RSI – is an indicator used in technical analysis. It measures if a traded product is overbought or oversold. Overbought/oversold describes recent movement in the price, and reflects an expectation that the market will correct the price in the near future. If the RSI is above 50, the product is overbought and likewise oversold when the RSI is below 50. If the RSI is above 70 or below 30, it’s quite massively overbought or oversold. The RSI should not be used alone in decision making, but along with other indicators.
In the graph below, you can see that Nordic Hydro vintage 2019 is oversold (RSI = 29.5). This is an isolated bullish signal.
If we take a look at the same product using a simple moving average, we see that the prices have increased slightly during the last weeks, following a long b...