ADX & RSI : Must Follow to Make Gains in the Market

RSI (Relative Strength Index) and ADX have been developed by J. Welles Wilder, Jr.

RSI Technical Indicator

We can tell you umpteen indicators which can help you get going in the market, however, two signals which can not be missed are RSI and ADX. If you use these two signals rightly in conjunction with other technical parameters, you are all set to get the riches from the stock market.

BIAS based on RSI as follows-

RSI Above 55-Long.
RSI below 45-short. RSI
between 45-55—- neutral.

Momentum based on RSI is as follows-

RSI— 55-60~mild long(25%),
RSI— 60-65~moderate long(50%)
RSI— 65-70~strong long (75%) RSI Above 70~ very strong long (100%)

Momentum based on RSI for short trades is as follows-

RSI— 40-45~mild short (25%),
RSI— 35-40~moderate short (50%)
RSI— 30-35~strong short (75%)
RSI below 30~very strong short (100%).

Please note, one need to check RSI at the closing of the day for a continuation of trade and exposure.

ADX Technical Indicator

Do you often get stuck in stocks that do not move? Chances are the stock is not in a trend or trading sideways. ADX helps to measure the strength of the trend in just a glance.

ADX is a non-directional indicator which means it will not tell you in which direction the security will move but will calculate the strength of the indicator.

Let us get straight to understanding the indicator, The value represents if the stock is trending or not.

ADX Value Trend

0-25 Trend is weak

25-50 Strong Trend

50-75 Very strong

75-100 Excellent

Avoid trading when the ADX value is lower than 25.

When ADX is above 25 and bias is on the long side then the trend is an uptrend. Similarly rising ADX and short bias give confirmation of a downtrend.

Remember that these signals are a tool and need to be used with other indicators to get a higher degree of accuracy and if you do not want to get into it and still wanna make money in the market then you should not miss out the best share to buy for intraday trading or bank nifty option tips as aim is to make money in the market whichever way it may come.

Lastly if you have the desire to become a technical analysis expert, you must check the link as it lists almost all good indicators in the market.