Binary Options Indicator Stochastic Strength Index is a combination of two tools of technical analysis: Stochastics and the RSI strength index. He has incorporated only the best features and settings. Stochastic RSI It was developed 1994 year.
Here's how it looks on live chart:
I think the appearance of the indicator many traders familiar and understandable. There are colored zone of up to 20 80. Anything above 80 - overbought zone, all below the 20 - oversold zone. Speaking of the indicator signals, they are very accurate and high-quality.
The signals on the indicator Stochastic RSI:
- If the line is the indicator rises above 80, it should wait for the turn indicator. Option PUT can be opened only when Stochastic RSI strikes mark 80 downwards. Another option for a fall can be opened when the mark breaks 50 downwards.
- If the line indicator drops below 20, it should wait for the turn indicator. Option CALL can be opened only when Stochastic RSI 20 strikes mark upwards. Another option is to increase may be opened when the mark breaks 50 upwards.
It is best to work with the light side, and not a pronounced trend. Stochastic strength index - A great tool for analysis. I am sure you will appreciate it too high.
If you simultaneously open two Stochastic and Stochastic RSI indicators on the chart, the differences will be obvious. The first is more twitch, and the second is smoothed. Many beginners prefer the second option, since it is much easier and more convenient to recognize its signals. And the market does not stand still, and now the classic version of the Stochastic is not always possible to clearly define the future direction.
The creators of this indicator, Stanley Kroll and Tushar Chand were indeed able to achieve the golden mean. According to statistics, for most of its time, the RSI Relative Strength Index is within the zone between 70 and 30, while the classic Stochastic, on the contrary, is in overbought and oversold areas.
Please note that a deal should be made only for those signals when both lines of the Stochastic RSI indicator intersect with the 80 and 20 lines. In other cases, it is better to ignore such a signal and wait the moment.
You should also not forget that this indicator responds strongly to all changes in the market. Therefore, it can sometimes show chaotic jumps and price impulses. It is important to learn to distinguish them from the real change of trend.
In addition to the main types of signals that were described earlier, there are others. Some more risky traders open trades in advance - when two lines cross each other, when they are still in the overbought or oversold area, and not crossed with 80 or 20, respectively.
Others put an additional 50 line on the scale and trade at the time of crossing the lines with it. In my opinion, this method is inexpedient and very risky.
Such hybrids are created with the aim of smoothing and minimizing deficiencies from the classic versions of the indicator. They also include better volume, QQE, RSI TMA and MBFX.