Larry Connors developed the Connors RSI, which is an enhanced version to the standard RSI.It reacts quicker to price changes because it uses period 2.The overbought zone is 90. If it falls below 10, the price will be considered oversold.This is quite different than other RSIs, which use period 14 and sets the oversold below 330. The oversold area is higher at 70.
How to Use The Connors Ri To Identify Ideal Buy and Sell Signals
This indicator functions in the same way as an RSI.
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If the indicator falls below 30, it is considered oversold.It is therefore likely to rally.Long positions are a good idea.
Sell Signals
The currency pair’s 90 reading means that buying pressure is high, which will lead to a pullback.It is a good idea to open short positions.
Connors Rsi Trading Example
This chart shows the Euro against GBP chart over a 4-hour period.After entering the overbought zone, the price declines sharply.This could indicate that buyers left the market after reaching their goals.The price fell dramatically.
After some time the price reached an oversold zone.A small rally was caused by the bears who exited.
Conclusion
Connors RSI, a modified RSI indicator, helps you to identify overbought or oversold areas.This indicator detects precise changes quicker and for a shorter time.This indicator is best when combined with other indicators.
