RSI Technical Indicator Chart Pattern Setups & Trend-lines
Traders can plot trend lines on the RSI in the same way as you as a stock indices trader can plot trend lines on the Index price charts. RSI trend lines are plotted the same way Indices trend lines are plotted on the Indices trade chart; by joining consecutive highs of the RSI or consecutive lows on the RSI Indicator.
RSI Trend Lines and Trend-lines on Indices Trade Charts
RSI Pattern Setups in Index Trade
RSI Chart patterns such as head & shoulders patterns or triangle chart patterns that aren't evident on the Indices price chart are often formed on this RSI indicator.
RSI also often forms Index trade chart patterns such as head and shoulders or triangles chart patterns that may or might not be visible on the Index price chart. As shown & displayed on the Indices trade chart below the Inverse Head and Shoulders reversal setup formation is clearly shown on this Stock Index RSI indicator.
Chart Patterns on RSI Trade Chart Indicator
Support & Resistance Levels using RSI Indicator
Sometimes Stock Index trade chart levels of support & resistance levels are demonstrated better on the RSI than on the Indices price chart.
In an upwards Index market trend the support areas should not be broken at any one time, if they are broken then price will also break the support levels & the upwards Stock Index trend is going to reverse.
In a downwards Indices trend the resistance levels shouldn't be broken, if they are broken then price will also break the resistance levels, and the downward Index trend is going to reverse.
Support and Resistance Levels on RSI Indicator
In the Indices example above when the third resistance level was broken the downward trend reversed to an upwards Index trend & when the sixth support was broken the upwards Stock Indices market trend reversed and broke the upwards Index trend line.
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