The RSI Buy – or Short

One of the simpler approaches to trade entry and/or exit is through the use of one indicator – RSI (Relative Strength Index). I post examples of this periodically and bring you NFLX (Netflix Inc) on the 5 minute chart today:

I have had numerous exchanges with other traders on how to filter out the noise caused by after hour and pre-market movements – but I think you can see the key areas:

1) for Short entry above the 70 level (top Blue horz line)

2) for Long entry below the 30 level (bottom Blue horz line – let it stabilize first, but won’t usually take very long)

With the example above, if you are long today, price is approaching the 70 level here so watch for some sellers to emerge. Trade ’em well.

33 thoughts on “The RSI Buy – or Short

  1. Hi Derald –

    I was reviewing your post on the short aspect. I came across $RBN today on a random sort on my idea list. Now it looks RBN printed a shooting star yesterday (i think) today’s massive move down was telling. However, I was not there for the ride down. The question I wanted to ask you, was outside of reading charts, and indicators, would a stock scanner ever pick-up something like this? Or is it simply the former. There are many ideas in the market, however, i want to find dramatic moves like these especially on the short side. Look forward to your insight.

    Regards

    Noman

  2. In the case of RBN, a Stochastics scan may have given you this stock on a list. But this big move down is hard to be foreseen. The best you could do is have Price Alerts set and let them trigger.

  3. Derald –

    Thanks! I will play around with Stockfetcher and see if I can create a list.

    Regards

    Noman

  4. I need to say thank you a whole lot for that job you have made in writing this article. I am hoping the same top work by you later on as well.

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