The Neutrality Rejection Trading Technique

Creating the Neutrality Rejection Technique in TradingView

This article presents a technique to be used on the RSI. A trading technique is a way of using an indicator. For example, the oversold and overbought technique is the simplest way of using the RSI. Similarly, divergences are also a technique to be used with different technical indicators. The neutrality rejection technique is an interesting concept born out of empirical experience.

The Relative Strength Index — An Introduction

The Relative Strength Index (RSI) is a technical analysis indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in an asset. It was created by J. Welles Wilder, a technical analyst, in 1978.

The RSI compares the average gains and losses of an asset over a given period, typically 14 days, and presents the results on a scale of 0 to 100. A reading above 70 is generally considered overbought, indicating that the asset may be due for a price correction or a reversal. Conversely, a reading below 30 is generally considered oversold, indicating that the asset may be due for a price rebound or a reversal.